E-commerce and taxation has witnessed widespread growth in Egypt, and it has become a project that has been attracting attention in recent years. Due to its widespread presence and the development of electronic platforms that facilitate time and effort for sellers and buyers in promoting and selling goods.
What is e-commerce?
E-commerce is the process of buying, selling, and marketing products or offering services through electronic platforms, social media, websites, and mobile and computer applications.
From the above definition of e-commerce, it can be divided into two types: selling goods online and providing services online, including online education. Due to the developments happening in Egypt and the digitization of systems worldwide, Egypt has embarked on keeping up with these advancements.
This has been reflected in the Egyptian tax authority in developing its systems and establishing internal units that were not present before, leading to the establishment of the e-commerce unit to integrate the informal economy into the formal economy, achieving tax justice and equal opportunities among different societal groups.
Two types of taxes are imposed on e-commerce:
Income tax: a direct tax imposed on the net income of natural persons (individual establishments) or the profits of legal persons (companies) derived from non-commercial or commercial, industrial, or service activities as per the provisions of Income Tax Law No. 91 of 2005 and its amendments.
Value Added Tax (VAT): an indirect tax imposed on all goods during trading stages (buying and selling operations) or when providing services, except for goods and services exempt from tax, as per the provisions of VAT Law No. 67 of 2016 and its amendments.
Registration for VAT is required under conditions set by Law No. 67 of 2016 if the value of sales of goods and services reaches or exceeds 500,000 Egyptian pounds annually.
As a contribution from the Egyptian tax authority to assist these projects and developments, a guide has been issued on the rules and instructions for tax treatment of e-commerce.
Conclusion:
In Egypt, e-commerce has experienced significant growth, garnering attention due to its widespread adoption and the emergence of electronic platforms facilitating buying and selling activities. E-commerce encompasses various transactions conducted via electronic means, including the sale of goods and provision of services through online channels like websites and social media platforms. The Egyptian tax authority has responded to this trend by establishing internal units, such as the e-commerce unit, to address tax implications and integrate informal economic activities into the formal sector. Two main taxes, income tax and Value Added Tax (VAT), are imposed on e-commerce transactions, with VAT registration required under specific conditions outlined in Law No. 67 of 2016. To support these developments, the Egyptian tax authority has issued guidelines for the tax treatment of e-commerce, aiming to ensure compliance and foster a conducive environment for digital commerce.
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