EGYPT: TREASURY OFFICIALS HEAR GOE APPEAL FOR TAX

UNCLAS CAIRO 003779

SIPDIS

SENSITIVE

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

E.O. 12958: N/A
TAGS: ECON EAID EFIN EG
SUBJECT: EGYPT: TREASURY OFFICIALS HEAR GOE APPEAL FOR TAX
REFORM ASSISTANCE

Sensitive but Unclassified. Please protect accordingly.


1. (U) On May 4, Deputy Assistant Secretary of Treasury for
Technical Assistance James Fall, Treasury officials Robert
Warfield and Keith Krchak, and Emboffs met with Minister of
Finance Youssef Boutros Ghali (YBG) and GOE tax
administration officials to discuss the possibility of
Treasury providing technical assistance in implementing tax
reform in Egypt. YBG expressed appreciation for the
assistance already provided by Treasury Advisor Keith Krchak
on debt management. He explained that Egypt's taxation
procedures needed reform, as they were based on Ottoman
period practices and were somewhat "medieval." Although
progress had been made toward modern, market-based
management, there was still much room for improvement. YBG
covered a number of areas that needed reform but focused his
appeal for assistance on creating a single GOE treasury
account for all ministries, bringing the tax system
up-to-date by merging the sales and income tax authorities
into one unit, developing independent audit and inspection
systems, and improving training and tax information
availability to customers.


2. (U) DAS Fall responded positively to YBG's reform ideas
and pledged to send a letter to him in early June explaining
what assistance Treasury was prepared to offer. Fall also
said that he would consider sending an expert from Treasury
for an introductory, non-committal orientation session to
explain more carefully how Treasury administers technical
assistance. Fall did not specify a time frame for such a
visit. (Note: YBG additionally sought Treasury assistance
in changing the GOE customs authority, but Fall explained
that Homeland Security, not Treasury, handles customs issues.
End note).


3. (SBU) Comment: YBG appears to be taking a "shotgun"
approach in his requests for assistance, appealling to anyone
who might be able to offer any kind of assistance, regardless
of potential duplication. During the course of Fall's visit
to Cairo, he learned from local USAID officials, private
sector consultants working for the GOE, and an IMF official,
that YBG has sought similar tax reform assistance - and in
some cases was already receiving it - from a variety of
sources. The IMF was offering assistance on developing a
single GOE treasury account for all ministries, and Booz
Allen was working on setting up a "Large Taxpayers' Office."
With that in mind, the Treasury delegation determined that it
would limit any offer of assistance to the area of tax audit
procedures, an area in which we understand no other entity is
currently offering assistance. End comment.


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GRAY