Identifier
Created
Classification
Origin
05CAIRO3445
2005-05-08 13:12:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Cairo
Cable title:  

IT'S THE REAL THING: U.S. SOFT DRINK COMPANIES

Tags:  ECON ETRD EFIN EINV EG 
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UNCLAS CAIRO 003445 

SIPDIS

SENSITIVE

STATE FOR NEA/ELA, NEA/RA, AND EB/IFD
USTR FOR SAUMS
TREASURY FOR MILLS/NUGENT/PETERS
USAID FOR ANE/MEA MCCLOUD
COMMERCE FOR 4520/ITA/MAC/ANESA/TALAAT

E.O. 12958: N/A
TAGS: ECON ETRD EFIN EINV EG
SUBJECT: IT'S THE REAL THING: U.S. SOFT DRINK COMPANIES
PLEASED WITH NEW TAX RATE

REF: CAIRO 3146

THIS CABLE IS SENSTIVE BUT UNCLASSIFED -- NOT FOR INTERNET
DISTRIBUTION

UNCLAS CAIRO 003445

SIPDIS

SENSITIVE

STATE FOR NEA/ELA, NEA/RA, AND EB/IFD
USTR FOR SAUMS
TREASURY FOR MILLS/NUGENT/PETERS
USAID FOR ANE/MEA MCCLOUD
COMMERCE FOR 4520/ITA/MAC/ANESA/TALAAT

E.O. 12958: N/A
TAGS: ECON ETRD EFIN EINV EG
SUBJECT: IT'S THE REAL THING: U.S. SOFT DRINK COMPANIES
PLEASED WITH NEW TAX RATE

REF: CAIRO 3146

THIS CABLE IS SENSTIVE BUT UNCLASSIFED -- NOT FOR INTERNET
DISTRIBUTION


1. (SBU) Post contacted Tarek Kabil, Chairman and CEO of
Pepsi Egypt, and Lobna El Dessouky, Chief Financial Officer
for Coca-Cola Bottling Company of Egypt, to confirm
implementation of the recently lowered tax rate on locally
produced soft drinks (reftel). Kabil said that Pepsi had
been pleased with the amendment to the tax law, but -- along
with Coca-Cola -- had some concerns that the language of the
amendment might be open to differing interpretations. To
ensure that the GOE and the soft drink producers were in
agreement on how the tax would be computed, Pepsi and
Coca-Cola met with government officials to discuss the exact
formula to be used. The two companies signed a Memorandum of
Understanding laying out the details, and the head of the
Sales Tax Authority and the Minister of Finance are expected
to sign it for the GOE within a few days, according to Kabil
and El Dessouky.


2. (SBU) Kabil said that after all allowable deductions, the
effective rate of taxation on Pepsi's soft drinks would be
around 15 to 18 percent. Post expects the effective rate
will be the same for Coca-Cola, though El Dessouky declined
to comment on Coke's effective rate until she has had a
chance herself to run all the numbers under the new formula.
El Dessouky promised to provide us with the rate once it is
computed.


3. (SBU) Kabil praised the embassy for its efforts over the
years to reduce the tax on soft drinks. He expressed relief
that the issue was finally resolved, and surprise -- given
the GOE's foot-dragging on this issue -- that the tax
amendment had passed so quickly after being introduced. He
credited its quick passage in part to Minister of Foreign
Trade and Investment Rachid, whom he lauded for taking
ownership of this issue. Based on the positive comments of
El Dessouky and Kabil, we expect no more requests from these
companies on the taxation issue.


Visit Embassy Cairo's Classified Website:
http://www.state.sgov.gov/p/nea/cairo

You can also access this site through the
State Department's Classified SIPRNET website.

GRAY