The new tax came into force last Thursday on June 3rd
Online food delivery saw a major jump in sales as the COVID pandemic swept the nation, and now has attracted the attention of the Finance Ministry who has now announced a new 14 percent VAT for online food delivery services.
According to Finance Minister Mohamed Maait on Sunday, the ministry imposed a 14 percent value-added tax (VAT) on all online delivery services provided by restaurants and shops as part of a new amendment to the VAT Act.
The new tax came into force last Thursday on June 3rd.
Previously, certain companies were required by law to collect and remit VAT on delivery fees, mainly major faces in the industry such as Uber.
Under the law, franchised retail and restaurant chains, as well as those in airports and shopping malls, were required to charge consumers the 14 percent VAT on online deliveries.
Individual shops and merchants selling online were exempt from the law.
With the new amendments, all restaurants and businesses with more than LE 500 thousand in annual revenues must charge and remit VAT for online delivery services.
The move is part of the government’s efforts in creating a framework for taxing ecommerce sales, something that many international governments are also aiming towards.
Yesterday, the Group of Seven (G7) countries’ finance ministers signed a pact to introduce a 15 percent global minimum corporate tax rate in order to minimize tax avoidance, mainly by major tech companies, to boost tax payments and ecommerce receipts.
Maait added that the ministry is to increase tax collection by 18 percent in the coming fiscal year (FY), targeting total tax revenues of LE 983 billion during FY 2021/2022.