Businessmen reject new tax proposal [Archives:2007/1022/Local News]

February 5 2007

SANA'A, Feb. 4 ) Representatives of the private sector and business community have refused to sign a proposed agreement with the government committee set to resolve the ongoing tax dispute.

The representatives say the new proposed agreement conflicts with previous agreements they had with the government regarding a taxation mechanism at the country's entry points for imported goods.

Three representatives of the Union of Chambers of Commerce met with government officials in a meeting chaired by Deputy Prime Minister Rashad Al-Alimi on Jan. 28 and reviewed a government proposal to amend the execution of the General Sales Tax. The representatives refused to sign and endorse the proposal and called a meeting with the general assembly of all chambers of commerce in the country in order to discuss the proposal.

Hassan Al-Kabous, a member of the Sana'a Chamber of Commerce, attended the meeting and said they were surprised the officials demanded they accept the proposal immediately. He said they will review the proposal with the general assembly of the chambers of commerce. Al-Kabous also added that he does not think that this problem will be solved without the direct intervention of President Saleh.

The government's proposal presented at the meeting included more flexibility in the collection mechanism of the tax as well as leaving the door open to minor adjustments on the taxation mechanism within the first six months of 2007. However, sources within the general assembly of the chambers of commerce indicated that the proposal falls short of businessmen's demands and will still have devastating consequences on local consumers. They say that most of the burden of the General Sales Tax will fall on the consumer and will have negative consequences on local businesses and the national economy.

According to the Minister of Finance Saif Al-Asali, the tax will not have any negative consequences on the economy or society, considering that it has exemptions for a number of foodstuff. The implementation of the tax will further develop the Yemeni market and encourage healthy competition benefiting the end consumer, he said.