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Enhancing Market Integrity Taxation

This programme in MENA/OECD focuses on tax policy development, revenue enhancement, and investment support to improve market integrity, facilitate trade, and promote economic growth. Through initiatives such as sales tax law rationalization and modernizing tax administration, it aims to create an enabling policy environment for private sector investment. Key focus areas include budget planning, commercial law reform, and human resource development to achieve macroeconomic stability and financial sector modernization.

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Enhancing Market Integrity Taxation

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  1. Enhancing Market Integrity Taxation MENA/OECD Investment Programme 17 May 2006 Cairo, Egypt

  2. Customs Reform Trade Facilitation Trade Policy Intellectual Property Rights Competition Trade Environment Financial Sector Modernization Bank Supervision Macro- Economic Research Bank Restructuring Problem Bank Resolution Central Bank Operations Monetary Policy Insurance Sector Restructuring Macroeconomic Stability Monetary Policy Tax Administration Expenditure Management Budget Planning Budget Execution (FMIS) Macro- Economic Analysis Tax Policy & Revenue Analysis Enabling Policy Environment Commercial Law Reform Industrial Policy Promotion Facilitating Services for the Private Sector Investment Policies Improved Enabling Environment Single Investment Window Formalizing Business Transactions Human Resources Legal Education Business Education Economics Education Program Support Project Management Grant Management Monitoring & Evaluation Development Support Program Public Awareness TAPR II Project Scope Industrial Policy International Competitiveness Industrial Parks

  3. Tax Revenues 2005

  4. Tax Policy Measures Income Tax Law • Limited amnesty for non-filers and outstanding disputes • Reduced rates and restructured tax brackets - maximum 20% • Increase in non-taxable threshold • Increased tax base through reduction of exemptions • Introduced residence-based taxation • Introduced self-assessment • Selective audit regime • Advance rulings • Commitment to special scheme for small taxpayers

  5. Tax Policy Initiatives Small and Micro Taxpayer Regime • Simplification and cost reduction • Simplified accounting • Streamlined tax procedures • Encouraging formality and tax compliance • Adopting a more targeted approach to service, education and control

  6. Tax Policy Initiatives Stamp Duty Regime • Duplication: In many cases, a stamp duty is only one of several taxes or fees charged by the government on a particular transaction. • Distortion: Many of the duties distort economic activity, such as the duty on checks, which provides a disincentive for people to use the banking system. • High compliance costs for both the taxpayer and the Administration: The procedure for levying stamp duties, affixing a stamp on each document, represents a time consuming and costly nuisance and undue burden on those private businesses and government agencies who collect the tax on behalf of the government.

  7. Tax Policy Initiatives Sales Tax Law • Rationalization of the GST threshold • Simplification of the rate structure • Reduction in the number of exemptions • Taxation of capital goods • Implementing a full credit/refund mechanism

  8. Tax Policy Initiatives Property Tax and Agricultural Land Tax • Insignificant revenue yield (was 20/30% in mid 1900s) • Very narrow base • Large number of exempt categories of property • Less then 20% of properties subject to tax • Value not based on current market • Infrequent reassessments erode valuations • Simplification of the rate schedule

  9. Tax Policy Initiatives - Institutional Tax Policy Unit • Currently no dedicated institutional body for tax policy preparation, analysis and monitoring. • Split between Income Tax, Sales Tax, Real Estate Tax Departments and the Ministry of Finance. Revenue Forecasting and Performance Analysis • Development of micro-simulation tax model for income tax • Development of indirect tax model for sales tax

  10. Tax Administration Measures Large Taxpayer Centre • Created in September 2005 • Manages the largest 2,000 taxpayers nationally • Integrated approach to all taxes • Focus on service orientated approach rather than enforcement based control

  11. Tax Administration Initiatives Integration of the Tax Departments • Recent communication confirmed the imminent merger of the Income Tax and Sales Tax Departments • Strengthen domestic revenue administration • Develop a single view of the taxpayer • Reduce administrative and compliance costs • Simplify procedures and improve services • Improve voluntary compliance • Enhance revenue collection

  12. Integration of the Tax Departments • Function-based organizational structure: • Registration • Service and Education • Processing • Audit • Collection • Policy and legal • Strong focus on taxpayer segmentation: • Large • Medium • Small

  13. Integration of the Tax Departments • Comprehensive reform of the tax administration • Build the professionalism of the tax administration through the upgrading of human resource policy and training • Develop simple and transparent processes and procedures • Develop and introduce an automated tax administration system • Enhanced capacity to provide taxpayer service and education • Introduce an effective integrity program • Establish performance standards

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