The Market Tip: How Will The New Vat Affect Your Business?

Nielsen, a leading global provider of information and insights, and Dcode Economic & Financial Consulting (Dcode EFC), a prominent economic intelligence and financial advisory firm providing solid forecasts of Egypt’s economic variables, have joined efforts to deliver a unique proposition to leaders of industry, The Market Tip.

The Market Tip is a quarterly forum that provides the ideal platform for discussion amongst company leaders and industry gurus about trends and market shifts that are approaching and re-defining to the way business is conducted.

The discussion this quarter is centered on key points covered during the recent Egypt Economic Development Conference, with a specific focus on the expected implications regarding the implementation of the proposed Value-Added-Taxes (VAT) law in Egypt.

The Market Tip How Will The New Vat Affect Your Business

“Our survey results show that only 20% of consumers are aware that there is an impending increase in VAT on their usual purchases,” noted Tamer El Araby, Managing Director, Nielsen North Africa & LEVANT. “An increase in prices is one setback when it comes to purchasing behavior, not knowing where the increase is coming from can have a significant impact on consumer loyalty.”

“The targeted additional VAT revenues as announced by the government stands at EGP 32 bn. The chosen rate, that will range between 12.5% and 15%, will have a significant impact on inflation hikes to range between 2% – 3.5% as producers will pass on this additional cost to consumers, before inflation recedes to its normal levels” noted Mohamed Farid Saleh, Chairman and CEO of Dcode Economic and Financial Consulting.

He also mentioned that “The social implications of higher inflation and its impact on consumer purchasing power is high, especially for food items that represent 40% of a typical household consumption. Private consumption was the main driver for Egypt’s economic growth that averaged 2.1% during the last three fiscal years and constitutes more than 80% of Egypt’s economy, while food and beverages items prices increased by almost 58% since January 2011”

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