|Samar Abdel Rahman
The Egyptian Minister of Finance has confirmed that the
Executive Regulations of the Value-Added Tax Law No. 67/2016
will be released by the beginning of February 2017 after the
Egyptian Parliament has approved it.
The VAT Law No. 67/2016 was issued early in September 2016
to repeal and replace the General Sales Tax Law No. 11/1991 and
entered into force the day after it was published the Official
The general VAT rate has been set at 13% for the fiscal year
ending June 30 2017. From July 1 2017, it will be increased to
14%. Machinery and equipment used in producing taxable or
non-taxable goods or rendering services are subject to a 5% VAT
rate, whereas exported goods and services are zero-rated.
However, special rates apply to a number of goods and services
listed in Table (1) of the VAT Law.
According to the VAT Law, all local and imported goods and
services are subject to VAT except those specifically exempted.
Services – as defined in the law – include
any imported or local work done and not classified as goods.
The VAT rates are applied subject to the classification of the
services and goods under three main categories:
- Goods and services subject to the schedule
tax and VAT;
- Goods and services subject to schedule tax
- Goods and services exempted from VAT.
The VAT registration is obligatory to all persons or legal
entities selling goods or services with gross sales of both
taxable and exempted goods and services equal or higher than
EGP 500,000 ($28,000) in the 12 months preceding the date of
the VAT Law entering into force. The person or legal entity is
obligated to register with the Egyptian Tax Authority (ETA)
within 30 days of the effective date.
Any person or legal entity meeting or exceeding this
threshold after the introduction of the VAT Law is obligated to
register within 30 days after reaching the VAT registration
Businesses originally registered under the General Sales Tax
Law will be automatically considered as registered for VAT,
provided that their annual turnover reaches or exceeds the new
Non-resident and non-registered persons supplying taxable
goods or rendering taxable services in Egypt to non-registrants
who do not perform an activity through a permanent
establishment (PE) in Egypt, will need to appoint a fiscal
representative responsible for all requirements listed in the
new law. If such non-resident and non-registered persons deal
with resident persons in Egypt, the resident person must ensure
that a fiscal representative has been assigned, otherwise the
resident will be liable to pay the tax due.
The VAT and schedule tax return should be submitted on a
monthly basis. The deadline for submitting the return has not
changed and is still set at two months from the end of each tax
period, except for the April return that should be submitted by
The VAT law has determined the applicable late payment
penalties as an additional payment to be due for each month or
part of a month starting from the tax payment deadline and
until the date of actual payment. The additional payment is
calculated as 1.5% of the unpaid VAT and the variable table tax
amount including the tax resulting from amending the tax
On the other hand, the sanctions for breaching the rules
that are set out in the law include:
- Penalties ranging between EGP 500 and EGP
- Payment of the VAT, table tax and
additional tax; and
- Penalties to be doubled if the breach is
repeated within three years.
Samar Abdel Rahman (email@example.com)
Tel: +20 100 6578928