In anticipation from all concerned parties, the Egyptian
Minister of Finance announced the issuance of the Executive
Regulations of the Value-Added Tax law no. 67/2016 by the beginning
of February 2017 after reviewing its draft by the People's
Assembly (the Egyptian Parliament) and approving 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 was in force from
the day following its publishing in the official gazette.
The general VAT rate has been set at 13% for the fiscal year
ending 30th of June 2017 and from 1st of July 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 only
Goods and services exempted from
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 in
the 12 months preceding the date of the VAT law enforcement. The
person or legal entity is obligated to register with the Egyptian
Tax Authority (ETA) within 30 days from the date of the legislated
Any person or legal entity, meeting or exceeding this threshold
after the introduction of the VAT law is obligated to register
within 30 days from the date of reaching the VAT registration
Businesses originally registered under the General Sales Tax law
will be automatically considered registered for VAT, provided that
their annual turnover reaches or exceeds the new registration
threshold (EGP 500,000).
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, shall 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
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 15th of June.
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 return.
On the other hand, the sanctions for breaching the law
provisions represented in procedures set out in the law
Penalties ranging between EGP500 and
Payment of the VAT, Table tax and
Penalties to be doubled if the breach
is repeated within three years
At Eurofast, we are keen to provide our clients with all
regulatory updates and to work closely with them to ensure full
compliance for their businesses with the rapid changes of the
legislation. Our seamless VAT registration, compliance &
advisory services are accurately tailored to satisfy the business
needs of our clients and fully mitigate the risks of being
non-compliant. Eurofast's team of professionals always works to
define the core business needs and values of the clients and thinks
beyond their expectations.
Our VAT array of services includes:
VAT registration and compliance
VAT recovery risks and
VAT return preparation
VAT advisory services
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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The VATA contains provisions which appear to support both the cash and accrual basis of accounting for VAT.
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