Indirect Tax News - October 2022

Changes to VAT rules include some relaxations

A law that went into effect in Egypt earlier this year and applies as from 27 January 2022 introduces several changes to the VAT rules, including the following:

  • Goods and services exported by entities operating in Egyptian Special Economic Zones are zero-rated, as are goods and services purchased by such entities, provided the goods/services are necessary for licensed activities.
  • Advertising services are subject to the 14% standard VAT rate to replace the 20% stamp duty, which has been abolished. 
  • The payment of VAT on machinery and equipment that is used for manufacturing/production purposes is suspended for one year from the date the machinery/equipment is imported and/or purchased.
  • Juridical persons that supply goods or services that are not subject to VAT but that import services that are subject to the VAT must register with the tax authorities and settle the tax via the reverse charge.
  • Nonresident businesses that make taxable supplies to resident individuals and non-VAT-registered entities must register for VAT purposes in Egypt under a simplified registration system.
  • Government ministries, departments, agencies, etc. must settle any VAT due within 10 days of the due date and must remit at least 20% of the VAT due directly to the Egyptian tax authorities.
  • The Egyptian tax authorities may estimate the VAT due for periods in which a tax return has not been submitted.

Mostafa Makram