|VAT Rate on Digital Services||VAT on Cross-Border Electronically Supplied Services||Digital Reporting Requirements for Foreign Sellers Providing Electronically Supplied Services|
|Typically 14%||Yes||Mandatory if VAT registered|
VAT on Cross-Border Digital Services in Egypt
In 2016, Egypt introduced VAT on B2C digital services transactions supplied by foreign companies.
B2C transactions are those where a foreign business provides digital services to a non-registered customer, without a valid VAT number. However, if foreign businesses provide services to business entities in Egypt, such a transaction will qualify as a B2B transaction. B2B transactions are subject to the reverse charge mechanism, and the recipient of the service will be obliged to declare and pay VAT.
To be able to fulfill their VAT obligations, foreign companies supplying digital services to Egypt are expected to register and charge VAT on sales of digital services to end consumers.
Digital Services in Scope
Egypt differentiates between online services, e-learning services, and the services of freelancers and makes content creators’ activity VATable. The Egyptian tax laws do not differentiate in the tax treatment of physical and electronic supplies of goods.
Egypt defines online services as services supplied through websites, electronic platforms, mobile or computer programs, or applications. Online services are, for example, providing medical, legal, tax, accounting, or engineering consultancy services, in addition to providing internet marketing services and website design.
Digital services are, for example, but not limited to:
- Digital supply of audio-visual services (including but not limited to music, video, movies, games, e-books, and transmission of any event);
- Digital distribution platform;
- Online publicity services;
- Online training or education services;
- Rights for use or exploitation of intangibles.
A self-employed freelancer is a person who carries out his activity independently, without a dependent relationship with a business owner, and works on his own via the internet. Freelancers must register for VAT as soon as they start their activity without a registration threshold, and they are subject to a 10% table tax. Where Egypt is the center for practicing the profession or activity, any revenues realized (in Egypt or abroad), are considered taxable revenues.
E-learning is a distance education process that does not require attendance by using various electronic means, whether via the internet through educational platforms, mobile phone applications, computers, or through electronic storage, such as external hard disks, flash memory, or through CDs. This process allows learning anytime and anywhere and includes displaying text, video, audio clips, animations, and virtual environments. E-learning services are exempted from VAT if an employee of an educational institution performs them, and if this activity is part of his job duties. If the service provider practices the e-learning activity independently by imposing a profit, tax registration is required.
Content creators are people who make videos, audio music clips, songs, video or audio broadcasts, or publish and broadcast information through written or visual blogs in specific contexts on digital platforms or various mobile and computer applications. Bloggers and influencers are also included.
During the registration process, the following activity codes shall be used:
- Activity Code No. 117 has been allocated to e-commerce
- Activity Code No. 118 has been allocated for the production and broadcasting of audio and visual content
- Activity code No. 119 has been allocated for the production and publication of readable content
Determining the Location of the Egyptian Consumer
The place of supply of the services is where the recipient is located.
VAT Registration for Foreign Companies
- VAT registration threshold for non-resident suppliers of Digital Services: EGP 500,000
- Fiscal representatives: Not necessary for non-resident digital service providers, but possible
- Other: Non-residents, foreign companies, and unregistered individuals who do not conduct business through a permanent establishment in Egypt and offer taxable services to non-registered individuals in the country must register under the simplified vendor registration system
VAT Returns and payment of taxes
VAT returns for non-residents
Once registered, businesses must collect and remit taxes to Egyptian Tax Authority.
|VAT Return Name||VAT return form (Form 10)|
|Annual Return||Not required|
|Filing Deadline||The VAT return should be filed within a month from the month's end|
|Payment Deadline||Tax due on the date of submission of the return|
|Payment Currency||Egyptian Pound (EGP)|
|Input Tax Recovery||Under certain circumstances, it is allowed|
|Record Storage||5 years following the tax period for which the return is submitted|
Digital Reporting Requirements for Cross-Border Digital Services
As soon as a non-resident business is obliged to register for VAT purposes in Egypt, it has to be compliant with the e-invoicing and reporting rules. B2B e-invoicing and reporting rules are already binding to all taxpayers, while the implementation of these rules to B2C transactions is in progress. ETA extends the scope of B2C electronic invoicing and reporting obligations in phases and lists the newly appointed businesses in its decree.