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Your smokes are getting pricier: The Egyptian Tax Authority (ETA) will implement a 12% tax increase on cigarettes starting November, in accordance with the amended VAT law, a government source told EnterpriseAM. This marks the second tax hike on local and imported cigarettes this fiscal year.
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REMEMBER- VAT amendments were ratified in July, introducing a 12% annual increase for various cigarette categories over the next three years, effective 2 November. The amendments will also impact crude, construction and contracting services, and alcoholic beverages. The amendments will help the government bring in an additional EGP 200 bn in tax revenues.
The upcoming tax increase on local and imported cigarettes will be the second since the fiscal year began in July. Eastern Company and Philip Morris both hiked prices in July, pushing the price per pack to up to EGP 105.
The tax increase will not be applied uniformly across all companies, head of the Federation of Egyptian Industries’ tobacco division Ibrahim Imbaby told EnterpriseAM. He explained that some of Eastern Company’s cigarettes are currently priced at EGP 44, which is below the first tax bracket of EGP 48. This allows the company to raise its prices by approximately EGP 4 without moving into a new tax bracket. Imported cigarettes, however, are more likely to be affected as they fall into the higher tax brackets.
What does this mean for the state’s coffers? The ETA is looking to collect an additional EGP 8 bn in tax revenue following this new increase in VAT, our source noted. The recent tax amendments are projected to raise total tax revenues from cigarettes to EGP 111 bn this fiscal year, up from EGP 93.8 bn in the last fiscal year, according to a government document seen by EnterpriseAM.
These measures are part of the IMF-backed reforms under our USD 8 bn loan program, a source previously told EnterpriseAM.
The tax increase is expected to fuel inflation during 4Q 2025, which is widely expected to see elevated price pressure thanks to the last round of fuel subsidy cuts.
