Egyptian Minister of Finance Amr El-Garhy issued the Value-Added Tax (VAT) bylaws, which consist of 79 articles. The bylaws were reviewed by the State Council and have been prepared after a lengthy community dialogue organised by the Ministry of Finance with all interested parties.
The minister said that the bylaws include a number of simplifications for the tax community, such as a tax refund for exported goods and services—whether they have been exported in their initial state or have been re-introduced in the form of other goods and services—for registered credit older than six fiscal periods, and for taxes paid previously on machinery and equipment used in the production of a commodity or a taxable service.
El-Garhy noted that in order to facilitate the financiers under the regulations, the maximum period for a tax refund is 45 days from the date of submitting the “registrar for tax reimbursement” request. He added that the bylaws included a number of articles that aim to clarify the tax treatment for a number of services not subject to the VAT. Those services include financial transactions between the holding companies or subsidiaries, trading in stocks and other securities, and the work performed by workers to employers for a wage according to the employment contract.
The bylaws have indicated the establishments that aren’t required to register for the VAT, such as importers and exporters whose activity only includes exempted services or goods, traders who limited their activity on goods and services that are subject to table tax, as well as any establishment whose business volume is lower than the legally specified registration limit standing at EGP 500,000.
In light of the VAT law, El-Garhy said that the additional tax will be calculated at 1.5% monthly, or around 18% annually instead of 26% previously. And the additional tax wouldn’t count after first three years from the date of filing the tax returns.
On the other hand, deputy finance minister Amr Al-Mounir explained that penalties for violating the VAT law will include the payment of a fine ranging from EGP 500 to EGP 5,000 with the obligation to pay the tax due, the table tax, and the additional tax; in case of a repeated violation within three years of the first violation, fines will be doubled. In case of tax evasions, it will be considered as a moral turpitude crime, punishable by imprisonment for three to five years and a fine of EGP 5,000 to EGP 50,000.
