The Egyptian Tax Authority (ETA) published VAT guidelines for digital and remote services provided by non-registered foreign companies.

Timeline

The effective date for applying VAT on digital and other remote services in Egypt is June 22, 2023.

Impact

The VAT guidelines provide clarification on the following:

• Definition of digital and other remote services

A remote service is considered to be provided in Egypt if the recipient is a tax resident of the country. Anything other than goods that are provided without a physical connection between the place where the recipient is located and the place where the service is provided falls under the definition of remote services. This definition includes services provided digitally and electronically but also by any other remote means (e.g. legal advice).

• Registration threshold for non-resident digital and other remote service providers

There is a registration threshold of EGP 500,000 annual turnover for digital and remote services unless the service is a professional or consultancy service, in which case there is no threshold.

• Applicable VAT rates and the differences between business-to-business (B2B) and business-to-customers (B2C) scenarios

Foreign digital service providers should charge VAT on B2C transactions. The applicable VAT rate is 14% unless it is a professional or consultancy service, in which case it is 10%.

The reverse charge applies to B2B transactions. The registered local company must provide its TIN to the foreign supplier. Consequently, the foreign supplier must validate the Egyptian TIN of their business customers.

• Marketplace rules

In the case of marketplaces or electronic distribution platforms (EDPs) that act as intermediaries in taxable transactions, they should register, collect and remit VAT instead of the foreign supplier. The EDP is the deemed supplier, regardless of where the supplier is located.

• Compliance rules

Foreign suppliers should issue invoices where special rules should apply.

VAT returns should be submitted on a monthly basis, by the end of the subsequent month.

Tax remittance should be made before the VAT return is filed. Until December 2023, tax remittance can be made only in EGP or USD. Afterwards, new currencies should be available.

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Additional Resources:

• Egypt VAT Guide: Tax Number Format, Rates & Compliance
• Egypt VAT on Digital Services
• E-invoicing in Egypt