Tax incentives for informal economy projects throughout the temporary license period

Law No. 152 of 2020 promulgating the Law for the Development of Medium, Small and Micro Enterprises specifies the tax due on informal economy projects whose business volume reaches one million pounds and does not exceed ten million pounds during the validity period of the temporary license according to the following principles:

• (1%) of the turnover for projects whose turnover reaches three million pounds and does not exceed ten million pounds annually.
• (0.75%) of the turnover for projects whose turnover is two million pounds and less than three million pounds annually.
• (0.50%) of the turnover for projects whose turnover is one million pounds and less than two million pounds annually.

It is worth noting that Law No. 152 of 2020 promulgating the Law for the Development of Medium, Small and Micro Enterprises aims to regulate the practice of financing activity for medium and small enterprises that takes place outside the banking sector (the informal economy) and is not subject to integrated legal regulation and the majority of it is practiced through informal mechanisms. Which leads to the waste of many resources of the national economy, especially in light of the increase in microfinance activity that is considered a boom after the issuance of Law 141 of 2014 regulating microfinance activity. Below we review the tax due on informal economy projects during temporary licensing.