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Egypt's sole tuk-tuk assembler GB Auto is campaigning for the budget vehicle to be reclassified as a motorcycle to qualify it for lower sales tax. The country's traffic authority, however, is holding fast to its conviction that the three-wheeled machines count as taxis and should be taxed at a higher rate.
"Traffic authorities confirmed to us that a tuk-tuk is still considered a taxi, so our decision on taxation remains unchanged," Hassan Abdullah, the head of Egypt's sales taxes department, a division of the finance ministry, told Ahram Online.
GB Auto thus looks set to pay a 15 per cent sales tax each time it builds one of the pint-sized vehicles, the likes of which have flooded Egypt's streets in recent years.
Earlier on Wednesday, Beltone Financial in a note said that GB Auto's management had agreed with the government to pay only 10 per cent tax on tuk-tuks. The investment bank called the statement "positive news" for the company.
Taxing tuk-tuks at 15 per cent would translate into an additional cost for GB Auto of LE5,000 per vehicle, which analysts say could affect the firm's profitability and sales volume.
Tuk-tuks made up 8 per cent of GB Auto’s sales in the 2010 financial year, and about 12 per cent last year.
Earlier in 2012, Egypt's sales tax department stated that since tuk-tuks often serve as taxis they should be taxed in the same way.
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