Overview
As part of the Egyptian government’s ongoing digital transformation efforts, the Egyptian Tax Authority (“ETA”) has implemented a simplified VAT registration and compliance framework for non-resident vendors and electronic distribution platforms (EDPs), that sell or provide remote services to final consumers in Egypt.
In addition, an Application Programming Interface (API) platform has been introduced for B2B transactions, enabling non-resident suppliers to verify their customers’ Tax Registration Number (TRN) or Unique Identification Number (UIN). Please note that it is mandatory for non-resident suppliers to implement the API platform as this is the only way to verify their Egyptian customer’s TRN or UIN.
Key provisions applicable to VAT on ESS
| Particulars | Description |
| Scope | Both B2C and B2B |
| Liability to remit VAT | B2C case: The non-resident is required to collect and remit the VAT due. B2B case: The non-resident is required to collect and remit the applicable VAT if the service recipient (resident in Egypt) does not provide a valid TRN or UIN, and if the non-resident has not implemented the API platform. B2B case: If the non-resident supplier has implemented the API platform and the business customer in Egypt has provided its TRN or UIN, then the service recipient (resident in Egypt) shall apply the reverse charge mechanism. |
| VAT rate |
|
| Taxable value | The total amount of the provided service |
| Effective date | 20 June 2023 |
| VAT registration threshold |
|
| Tax invoice | The service provider shall provide a tax invoice including the due VAT amount. |
Services in scope
Relevant services include any services where, at the time they are performed, there is no required connection between the recipient’s physical location and the place where the service is physically performed, as detailed below:
- Supplies of digital content, such as e-books, movies, TV shows, music, and online newspaper subscriptions
- Website design or publishing services
- Online supplies of games, apps, software, and software maintenance
- Legal, accounting, or consultancy services
In other words:
- The service is delivered online or remotely
- The customer and the supplier are in different countries
- The physical location of the customer does not affect how the service is delivered
Registration and compliance
To register under the simplified vendor registration regime, the vendor should create an account on the Egyptian Tax Authority (ETA)’s website.
Filing VAT returns
Non-resident suppliers providing services to a non-VAT-registered consumers in Egypt are required to file a monthly tax return with the ETA as they fall under the simplified electronic VAT return. The return must be submitted by the end of the month following the relevant taxable period, along with payment of the VAT due. Please note that the ETA currently accepts payments in USD, EURO, GBP only.
Invoicing
The invoice/receipt which can be in any format, must contain the following information:
- A clear description of the service, the amount charged, the rate, and the VAT amount.
- Invoice/receipt issuing date.
- The name and registration number of the non-resident supplier.
- Invoice/receipt number.
VAT on costs
Non-resident suppliers registered under the simplified tax registration are not allowed to recover any VAT incurred on costs in Egypt as input tax on the monthly VAT returns. However, the non-resident could submit a letter to request for this VAT refund directly to the ETA.
Other considerations
Platform Liability
With effect from 1 June 2023 the Egyptian VAT Act introduced a new definition for the Electronic Distribution Platform (EDP) as follows:
“A digital platform, such as a website, internet portal, online store, digital market, or others that enables both the vendor of the commodity or the service provider and the beneficiary of the commodity or the service recipient to interact in order to supply the commodity or perform the service through it.”
EDPs are online platforms that connect sellers and customers. Some examples include:
- Online marketplaces
- App stores
- Digital platforms
- Online portals
The Ministerial Decree illustrates how this mechanism applies by addressing the conditions that need to be fulfilled, for the platform not to be responsible for collecting and remitting the tax to the authority:
- An agreement must be in place between the service provider and the platform confirming that the service provider, rather than the platform, is responsible for remitting the tax to the authority.
- The invoice or the receipt issued to the unregistered person (service recipient) must indicate that the person who interacts with the platform for the service is the same person who provides this service and must clearly describe the nature of the service.
- The platform’s general terms and conditions must clearly state that the platform does not provide the service to its recipients, and it is not authorised to collect tax from those who provide services through it.
In addition, the terms and conditions should not include anything expressly or implicitly indicating that the platform has a role in completing the provision of the service to its recipients.
Furthermore, the EDP is not be responsible for any tax that may be due in excess of the value of the tax acknowledged and paid by the service provider in case the platform has collected the tax and remitted it to the tax authority based on the data correctly provided by the service provider or any third party.
If any of the conditions above are not met, then the EDP may be responsible for paying the tax due to the ETA on behalf of the vendor.
VAT on cryptocurrency/digital assets
Currently, Egypt does not have specific VAT rules or regulations relating to cryptocurrency-related activities or digital assets.
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