Egypt

Overview

In light of the Egyptian government’s continual efforts in the digitalisation journey, the Egyptian Tax Authorities (ETA) has implemented a simplified VAT registration and compliance framework for non-resident vendors and electronic distribution platforms (EDPs) selling remote services to final consumers in Egypt.

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Key provisions applicable to VAT on ESS
Services in scope
Registration and compliance
Filing VAT returns
Invoicing
VAT on costs
Other considerations

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Release date: April 2024

Key provisions applicable to VAT on ESS

Table 1

Services in scope

Relevant services include “Any services where at the time of the performance of the service, there is no necessary connection between the physical location of the recipient and the place of physical performance”, 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

Registration and compliance

To register under the simplified vendor registration regime, the non-resident supplier must create an account on the ETA’s website.

Filing VAT returns

Non-resident suppliers who provide services to consumers not registered for VAT in Egypt are subject to a simplified electronic VAT return. They must file their monthly tax return with the ETA and pay the VAT due by the end of the month following the expiration of the taxable period.
The VAT return is considered the taxable person’s self-assessment of tax due for that period.
Regarding payment to the ETA, the ETA currently accepts payments in EGP and USD only. Other currencies should be available shortly.

Invoicing

The invoice/receipt, which can be in any format, must contain the following information:

Service description and amount, and the rate and the amount of VAT
Invoice/receipt issuing date
The name and registration number of the nonresident supplier
Invoice/receipt number

VAT on costs

Non-resident suppliers registered under the simplified tax registration are precluded from recovering any VAT incurred on costs in Egypt as input tax on the monthly VAT returns. However, a non-resident can submit a letter directly to the ETA to request a VAT refund.

Other considerations

A new definition was introduced for an ‘‘electronic distribution platform’’, and it was added to the definitions incorporated in Article no. (1) 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.”

The ministerial decree illustrates the mechanism of its application by addressing the conditions that need to be fulfilled in order for the platform not to be responsible for collecting and remitting tax to the authority:

An agreement between the service provider and the platform shall be in place confirming that the service provider is the party responsible for remitting the tax to the authority instead of the platform.
The invoice or the receipt that will be issued to the unregistered person (service recipient) shall indicate that the person who interacts through the platform for the service is the same person who provides this service, with an explicit mention of the nature of the service.
The general terms and conditions that regulate the platform’s activity clearly state that it does not deliver the service to its recipients and is not authorised to collect tax from those who provide services through it.

Additionally, these terms or 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 electronic distribution platform shall 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.

Particulars	Description
Scope	Both B2C and B2B
Liability to remit VAT	B2C: The non-resident is to collect and remit the VAT due. B2B: The service ‘recipient’ resident in Egypt is to apply the reverse charge mechanism.
VAT rate	Supplies made on the e-service are subject to VAT at the rate of 14%. Professional and consultancy services are subject to VAT at the rate of 10%.
Taxable value	The total amount of the provided service
Effective date	20 June 2023
VAT registration threshold	EGP 500,000, or equivalent in any other currency for any period of 12 months
Tax invoice	The service provider shall provide a tax invoice that includes the due VAT amount.

Download publication (pdf - 4.20mb) VAT in Africa Digital Services

This report is a special edition of our annual VAT Guide in Africa, focusing on new rules and measures that have been introduced to tax the digital economy unilaterally by countries in Africa.

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