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Egypt to revise 'tax-free' status of bonds

Cairo, May 12, 2008

Egypt plans to revise the tax exempt status on Egyptian government bonds as it seeks revenue to cover the cost of public sector salary increases, finance minister Youssef Boutros Ghali said on Sunday.

The measure would balance a decision announced last week to charge a 20 per cent tax on interest on treasury bills, Boutros Ghali said.

"As for Egyptian bonds, until now they are tax exempt and they continue to be tax exempt. With the new budget law, we are going to revise this," he told journalists. "We need to do this so we don't have an imbalance in our instruments."

Boutros Ghali said the move would be effective with a new budget law expected in July. The abolition of tax-exempt status of interest on treasury bills was part of the financial package parliament approved last week to cover the cost of a 30 per cent increase in public sector salaries. The move drove up yields at an auction last week.

The package approved on Monday included higher prices for fuel, higher taxes on cigarettes and some new taxes on private schools.

Boutros Ghali said it would raise 12 billion Egyptian pounds ($2.2 billion), about as much as the salary increases and other extra costs.-Reuters




Tags: Egypt | bond | revise | tax exempt |

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