May 4, 2020 / 4:14 PM / in a month

Egypt raises new tax on fuel as it confronts coronavirus crisis

CAIRO, May 4 (Reuters) - Egypt’s parliament approved a series of new taxes on Monday, including groundbreaking levies on petrol and diesel, as it works to plug a revenue gap caused by a coronavirus-induced economic slowdown.

Egypt for decades had heavily subsidised fuel prices, but removed almost all subsidies under a three-year International Monetary Fund (IMF) programme that came to a close in November.

Under the new legislation, the government will collect 0.30 Egyptian pounds ($0.02) for each litre of petrol sold and 0.25 for each litre of diesel.

The new tax will be paid by the state Egyptian General Petroleum Corporation and not by consumers, a cabinet statement said.

A committee that sets domestic fuel prices had been expected to sharply decrease the price of petrol at a quarterly meeting on April 10 following a dramatic fall in international prices the month before, but in the end only decreased it by 0.25 pounds per litre.

A litre of the main 92-octane grade of petrol now sells for 7.50 pounds.

Egypt last week asked the IMF for financial support to help it deal with the coronavirus crisis, which has shut down the vital tourism industry and threatens to reduce worker remittances from abroad.

Other taxes under the new legislation include higher fees on duty-free goods, wedding and other receptions at hotels and registrations at the real estate registry office, in addition to a levy on pet food and sporting contracts.

A tax 5% tax will be charged on mobile telephones and accessories and a 2.5% tax on internet usage by companies. ($1 = 15.7000 Egyptian pounds) (Reporting by Nashaat Hamdy, writing by Ehab Farouk and Patrick Werr; editing by Grant McCool)

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