The government introduced the VAT in 2016 as a replacement to sales tax regime. It accounts for 14% starting from the financial year 2017/2018, and applies to all goods and services. However, there are a number of basic goods and services that are exempt due to the tax’s negative effect on low-income earners. Special VAT rate also apply on a number of goods and services included in the tables attached to the VAT law.

Applying VAT is expected to generate an extra EGP 20 billion in addition to helping avoid tax evasion as it is implemented on each stage of the production chain of goods and services. It also introduced the reverse charge mechanism in Egypt for the first time, whereby transactions involving non-residents providing services/royalties to Egyptian resident entities have become subject to VAT in Egypt.

Registration requirements:

• Businesses are required to register providing that their annual turnover exceeds the new registration threshold of EGP 500,000;
• Importers and businesses selling goods or providing services included in a schedule to the VAT law are required to register regardless of their turnover.

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