Parliament approved yesterday the Value-Added Tax (VAT) baseline rate of 13% in FY16/17 and 14% in FY17/18, including a list of 56 goods and services that are entirely exempt and a list subject to various fixed rates. Exemption list includes: food (except luxury items); financial services, Infrastructure and utilities (except of bottled water); ADSL internet (only for the first year of the law); energy and mineral resources; healthcare (both locally manufactured and imported, except cosmetic products); education; transportation (except air-conditioned passenger land travel and car rental services); real estate; and agriculture. The list also includes goods traded within free zones, goods bought using a grant or aid funding, services by the Egyptian diplomatic corps, goods and services purchased by the Armed Forces or for the purposes of national defence, and all contracts with the diplomatic corps and the Armed Forces will be exempt. Violators will face prison sentence of three-five years and an EGP5-50k fine. Companies achieving sales above EGP500k in the 12 months prior to passing of the bill have one month for enactment to register for the VAT. Exporters are eligible for VAT rebate on their products if the generated foreign exchange is channeled into the banking system as per CBE regulations. Rebates will also be offered on capital equipment and machinery for manufacturing. The value of the rebate must not exceed 1% of VAT revenues. (Al Ahram, Youm 7)