We woke up this week, right before the holidays, to the passing of the Value Added Tax (VAT) in Egypt, effective immediately. What does this mean to me, an average Egyptian? Price changes? Immediately?

Price changes? Immediately? Yes.

The answer is yes. Many major businesses, especially Fast Moving Consumer Goods (FMCGs) spent this holiday finalizing prices to match the recently passed law. Here’s what to expect from a consumer perspective.

Bigger Picture

Let’s agree that strategic goals might vary from actual implementation and results. The goal is to slightly increase the tax income coming from non-basic commodities & services that the upper classes benefit from but to collect those slight added taxes earlier than usual.

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Overall Impact

If your day typically involves a Starbucks, lots of smoking, dining & beer, expect quite a raise in the prices, not only of the above or similar commodities, but also in services that this class of spenders might be interested in, including parking for example or entertainment.

Impact is estimated to be around 30% of price increase on average for most of those products. While the additional taxes aren’t that high, it’s expected that retailers & distributors will seize the chance to increase prices in order to cater for inflation & raising USD value.

30% of price increase on average.

Will My Daily Commute Change? Will My Daily Bread Be Affected?

Not really, no price changes in food or fuel prices, public or private transportation. An exception to that would be Uber and the likes whose prices are subject to a slight rise as they fall under online paid services.

Borough Market Vegetable Stall

Further Changes?

Cell phone bills. Household commodities. All sorts of services including restaurants & hotelery as well as professional services such as law firms & accountants. Subscriptions such as internet, BeIn & the likes. Medical services? No, not this one.

Income Tax Changes?

No, of course not. Totally different story.

Is that it?

No. Definitely not. Even exempted products & services will witness a price increase. The VAT by default covers all products & services in all phases by definition unless otherwise stated. So a price increase is inevitable. That’s what our analysts foresee. But is this too bad? Not really.

Is that it? definitely not. Is this too bad? Not really.

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Written by The Wall Corp Journal

The WCJ team manages the firm's journal and serves as a main platform to broadcast our views, analyses, comments and advice on the economy, investment scene and business outlooks.