-- executive manager --ltc

Thank you for accepting our invitation to visit the LTC. Permit me to present to you some of the features of tax reform whose rules were established by the Minister of Finance as part of the economic refor

m which was thoughtfully and competently carried out by our government. The most important features of the economic reform are : Amending the laws and legislations ( customs, Income Tax Law No 91of 2005, and the preparation for amendment to the other laws. Laying the foundations for a radical change in the nature of relationship with taxpayers and work environment. ( The basis of relationship is the trust of taxpayer `s honesty and their voluntary compliance ).

Ongoing tax administration reform to cope with these amendments and keep the taxpayers `s rights as keen as treasury `s.

Justifications for the establishment of the LTC:

It has been found out through modern studies of tax systems in most, if not all, the countries that a small number of taxpayers represents the first taxpayer for the treasury and a big number of them represents small taxpayers who provide a small amount of tax revenues and the medium taxpayers who also provide a moderate part, however their role in driving the growth wheel cannot be denied as shown in the following fig.

A clear criterion of annual taxable revenue of 7 M EG pounds defines a small but important portion of the current taxpayer base ….

Analysis of Taxpayer Segmentation

2000 large taxpayers with net taxable Profit of 7M EG pounds or more

Large taxpayers are featured as an organized sector keeping good books and records. This sector `s accounts are approved by big accounting firms and is liable to the control of the Central Auditing Organization ( CAO), so this sector could be dealt with out of full trust of honesty of books especially with an information system within the tax machinery that confirms the accuracy of books and returns filed. Several experiments carried out by advanced countries have proved the necessity of establishing a center for large taxpayers, which achieves the following goals :

First : facilitating the treatment of large taxpayers and improving the level of services provided to them. Also saving time ,effort ,and cost for both taxpayers and revenue departments through adopting the one stop shop concept.

Second : rendering the accounting out of trust in honesty of taxpayers and the accuracy of their books and returns, which leads to the increase of voluntary compliance of those taxpayers and hence the increase of inward flows to the treasury and reduce the expenditure of collection.

Third :preparing for full merger between Sales Tax Dept. and Income Tax Dept., which will be reflected on facilitating accounting matters and reducing cost, effort, and time spent in accounting to reach an agreement with the taxpayer and finally the fair tax base. The Minister of Finance realized that the achievement of these goals deserves the efforts exerted and so the LTC was established. Factors of the success of the LTC establishment :

First factor : the Minister `s efforts to establish the LTC with nearly daily follow up in terms of thought, planning, and implementation.

Second factor : the modern studies which have been provided by the international institutions the IMF, and the international firms in terms of the feasibility of the establishment of a large taxpayer center. Third factor : the previous efforts exerted for the establishment of the infra-structure of this LTC in terms of buildings, equipment, and tools and the things added to raise their capacity and efficiency.

Fourth factor : The manpower of the LTC staff from the mother departments. This manpower was not a follower of external thought but equally participating in the preparation and implementation efforts. This manpower is a force for the present and will be for the future, ALLAH willing, with more preparation and internal and external training whose plans were already drawn up for a full training year, especially the two commissioners of Sales Tax and Income Tax were generous enough to provide the LTC with the most efficient, experienced and skillful manpower appreciation of the expected role of the LTC.

One might ask about the reason for excluding customs from the LTC, this is because, after customs amendment, all customs outlets have been rehabilitated and prepared to provide the same level of service which was available in the former Model Customs and Tax Center(MCTC) with more facility and less time which led to confining the merger to Income Tax and Sales Tax departments.

The organizational structure of the LTC was prepared to serve purposes on a functional not on a type of tax basis in a way enhancing merger idea declared and achieving objectivity in accounting regardless of type of tax for which accounting is carried out or the auditor conducting the audit process…..

In spite of the importance of all the departments and divisions of this structure, special attention have been given to the following departments :

Taxpayer Service Department: provides different services, administrative, procedural, accounting, and legal facility for taxpayers.

Audit Department : for devising new techniques for audit concentrating on oriented selective audit and the criteria thereof, economic analysis, credibility tests, all these out of trust concept and hence audit is carried out by audit department for the purpose of confirming this trust and not for searching for errors or mistakes so long as such do not touch honesty or integrity. Information department : is responsible for development works in the previous two fields by providing more facility and services to taxpayers or by providing an information system which facilitates getting the two departments actions, the third parties, and the other entities with a view to confirming trust and credibility in the taxpayers returns and hence facilitating audit process and making it more objective because audit will depend on authenticated information and consequently reducing subjective estimation element for the person conducting audit. Whereas merger is one of the objectives sought for, it was easier to select a system, import it, and customize it with the Egyptian laws and pay its costs consequently, however the Minister of Finance considered to place reliance on his staff sons in IT in both Income and Sales Taxes departments and provide them with his support to develop the administrative reporting system which helps the decision maker and taxpayer service in taxpayers premises or within the LTC and also in developing a full system of merger between the two departments in the near future.

Development will not stop there and the modern things these days will be old and out of date if went beyond by others, so the LTC will always be keen on ongoing development and will not stop taking from the advanced countries experiences and keep contacting the taxpayers to study their observations and suggestions concerning development to meet their requirements and carry out the things useful for them. Again I extend my deep thanks for coming to the LTC and my profound appreciation. May God bless you, and may be watch over the LTC.