Egypt takes a significant step towards tax reform by implementing VAT on electronic services, ensuring fairness and revenue generation.
Egypt acknowledges the importance of levying taxes on electronic services as a means of generating revenue and fostering equity within the tax system — Photo illustrated by Business Today Egypt
Dr. Sayed Saqr, Head of the Districts, Centers, and Outlets Sector at the Tax Authority, stated that the imposition of value-added tax (VAT) on electronic services is not a new development.
In press remarks, Saqr added that all imported services are subject to VAT unless exempted by law.
He further emphasized that communication has been established with all electronic platforms providing services to individuals, which are not monitored by the Tax Authority. He clarified that the services offered by these platforms are subject to VAT.
Moreover, he highlighted that this measure ensures fairness and equality in applying taxes on services provided in Egypt, whether they are domestic or imported from abroad.
Dr. Saqr pointed out the existence of unregistered external platforms with the Tax Authority, and simplified registration procedures are made available for them. He explained that the tax value is collected from these platforms during the tax declaration process.
He considered Egypt to have been considerably delayed in implementing the VAT, but it is now following in the footsteps of advanced countries by providing a platform for these companies to submit declarations through.
Earlier, Finance Minister Mohamed Maait has issued a decision to amend certain provisions of the value-added tax (VAT) law.
The executive regulations of the VAT law include measures to temporarily exempt imported machinery and equipment used for industrial production from taxation for a period of one year.
Furthermore, goods or services exported by special economic zone projects abroad will be subject to tax at a rate of "zero."
The exemptions granted by VAT aim to support the industrial sector and stimulate economic growth.
In addition, foreign passengers who have departed Egypt for a period of less than three months will be eligible to receive a refund of the VAT value they have paid to registered sellers for taxable goods purchases.
The imposition of value-added tax (VAT) on electronic services in Egypt reflects the government's commitment to align with international taxation practices and ensure a level playing field for domestic and foreign service providers.
The move aims to address the growing digital economy and the increasing consumption of online services by Egyptian consumers.
Egypt has recognized the significance of taxing electronic services as a means to generate revenue, promote fairness in the tax system, and support economic growth.
By subjecting imported services to VAT, the government seeks to create an equitable environment where both domestic and foreign service providers contribute their fair share to the country's tax revenues.
The implementation of VAT on electronic services represents a milestone in Egypt's tax reform efforts and demonstrates its determination to keep pace with global taxation trends.
With simplified registration procedures for unregistered external platforms, the Tax Authority aims to encourage compliance and ensure that all relevant service providers fulfill their tax obligations.
