US embassy cable - 05CAIRO3779

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, Tax 
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