Thursday,20 June, 2019
Current issue | Issue 1424, (3 - 9 JANUARY 2019)
Thursday,20 June, 2019
Issue 1424, (3 - 9 JANUARY 2019)

Ahram Weekly

Taxing the social networks

Egyptian parliamentarians are requesting the imposition of taxes on social-networking sites on the Internet, reports Shaimaa Shalabi 

Social media
Social media

There have been many moves worldwide to impose taxes on social-networking sites such as Facebook, Twitter and LinkedIn and websites such as Google given the large profits these can make through advertisements.

They have encouraged Egyptian MPs to introduce a bill enabling the state to collect value-added tax (VAT) from such companies.

MP Badawi Al-Noweishi presented a briefing to Speaker of Parliament Ali Abdel-Aal and Minister of Communications and Information Technology Amr Talaat, saying that Facebook made more than $17 billion from advertisements in Egypt on an annual basis and that the government should impose taxes on this.

Other MPs introduced bills to fight cybercrime and e-trading on the Internet.

Telecommunications expert Mohamed Abu Koreish, president of the Egyptian Society of Telecom Engineers, said it was unlikely Facebook gained $17 billion in profit from advertisements in Egypt. 

“The advertisement market in Egypt in its entirety makes less than LE3 billion annually. This figure is divided between advertisements on television, the radio, newspapers and outdoor billboards. I don’t believe Internet advertisements in Egypt make more than LE0.5 billion a year,” he said.

Facebook’s total revenues from advertising worldwide grew 49 per cent in the three months preceding October 2018 to reach $10.14 billion. Approximately 88 per cent of this came through advertising on mobile phones.

There are obstacles standing in the way of imposing taxes on social-networking companies, communications experts say, such as the fact that these companies are headquartered abroad and there is no information about their revenues in particular countries.

These obstacles could be overcome if agreement could be reached with the companies, they added.

“Governments have long realised the dangers social-networking sites pose to their security and to other news channels and websites. Countries such as Germany, the UK and India have imposed taxes on these websites,” Abu Koreish said.

“Facebook doubled its profits last year at a time when other news agencies continue to lose money producing content that benefits social-networking sites,” he added.

Hani Al-Husseini, an accountant, said that “the government has a real chance to put in place new regulations and sign international agreements that will allow it to collect taxes from companies that have countless users in the country but don’t have a material presence such as Facebook and Google. It is not unusual to want to impose taxes on these platforms.”

 “The digital economy has become the gateway to many countries’ economic growth. We are obliged to allow these companies to function in Egypt, and the state should benefit from this growing economy,” he added.

The European Union has sought to impose fees on giant Internet conglomerates in return for their using news content from other sites. It is discussing legislation that would oblige the Internet companies to pay fees in return for the millions of articles they publish on their sites.

The UAE recently imposed VAT on services offered by the social-networking sites, according to statements made by Facebook and LinkedIn.

In a message to its users regarding changes related to the imposition of VAT in the UAE that could affect its services, LinkedIn said the company was increasing the price of its services by five per cent. 

It said this would be separated from the price of its product and would be directly transferred to the UAE tax authorities.

Russia has imposed 18 per cent VAT on Facebook after the company was added to the list of companies registered with the Russian tax agency as a foreign company selling electronic content.

The writer is a freelance journalist.

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