Egypt Value Added Tax 2025: A Guide for Foreign Investors

Key Features of Egypt VAT:

• Standard VAT Rate:
  • Egypt applies a standard VAT rate on most goods and services.
    It is very important to verify the current standard rate with the Egyptian Tax Authority (ETA) as it may change.  
• VAT Registration:
  • Businesses with taxable supplies exceeding a certain threshold must register for VAT.  
  • Foreign businesses conducting taxable activities in Egypt are also required to register, even if they don't have a physical presence.  
• Zero-Rated and Exempt Supplies:
  • Certain goods and services are zero-rated, meaning VAT is charged at 0%. Examples may include exports.  
  • Exempt supplies are outside the scope of VAT. Examples may include certain essential goods and services.  
  • It is very important to check the Egyptian Tax Authority (ETA) website for the most current list of zero rated and exempt items.
• Input VAT Recovery:
  • Businesses can recover input VAT incurred on eligible purchases related to their taxable supplies.  
  • Accurate record-keeping is essential for input VAT recovery.  
• Reverse Charge Mechanism:
  • The reverse charge mechanism applies to certain transactions, where the recipient of the goods or services is responsible for accounting for the VAT.  
  • This is common in cross-border transactions and certain B2B services.  
• E-Invoicing and E-Receipts:
  • The Egyptian Tax Authority is pushing very strongly for the use of electronic invoicing and electronic receipts.
    This will have a large effect on how VAT is handled.  
• VAT Returns and Payment:
  • Businesses must file VAT returns periodically, as determined by the ETA.  
  • VAT payments are due by the deadlines specified by the ETA.

Important Considerations for Foreign Investors:

• VAT Registration Obligations:
  • Determine your VAT registration obligations based on your business activities in Egypt.
• Accurate Record-Keeping:
  • Maintain accurate and complete records of all VAT transactions.
• Compliance with Deadlines:
  • Ensure timely filing of VAT returns and payment of VAT.
• Professional Advice:
  • Seek professional VAT advice to ensure compliance and avoid penalties.
• ETA Guidelines:
  • It is very important to stay updated with the latest guidelines and regulations issued by the ETA.

Key Takeaway:

• Egypt's VAT system is being modernized.  
• Compliance is essential to avoid penalties.
• The use of electronic invoicing is very important.
• It is important to stay updated with the ETA guidelines.