Egypt has announced a set of tax exemptions aiming to support the industrial sector and boost economic growth. Amendments were made to the Value Added Tax (VAT) Law under the directives of President Abdel Fattah Al-Sisi.
The amendments include the suspension of tax on imported machinery and equipment for industrial production for one year. In addition, medicine, active substances in its production, serums, vaccines, and blood and its derivatives, will be VAT free.
Moreover, the amendments exempt agricultural products from VAT, such as seeds, seedlings, vegetables and fruits produced locally. It also exempts the Suez Canal Authority services for ships transiting through it, including transit fees.
These amendments aim to address some of the problems that emerged during the practical application of the provisions of this law, Egypt’s Finance Minister Mohamed Maait said.
He pointed out that the Unified Tax Procedures Law canceled many provisions stipulated in the Value Added Tax Law, in addition to the conflict of some provisions contained in the two laws.
He indicated that the proposed amendments to the value-added tax law, which is currently being discussed in the House of Representatives, include granting goods or services exported by economic zone projects of a special nature abroad, or received by them, with the same tax treatment for goods or services exported by zone projects. Cities and duty-free shops abroad or imported to them are subject to tax at a “zero” rate; To encourage investment in economic zones of a special nature, the goods or services imported for these projects should not be charged with value-added tax.
The Minister of Finance pointed out the adoption of some provisions to subject e-commerce transactions to tax through the application of a simplified registration and collection system, instead of the current system based on appointing a legal representative.
Furthermore, every non-resident person who is not registered with the Tax Authority, who sells goods or performs taxable services to a person who is not registered inside the country, and who does not practice an activity through a permanent establishment in Egypt, is required to apply for registration under the simplified supplier registration system determined by the executive regulations.
The minister stressed that the draft amendments included the approval of several new exemptions related to vital services that affect the lives of citizens, and also related to vital sectors to support the industry and stimulate economic growth, and taking into account the social dimension.
The minister added that the list of goods and services exempted from value-added tax included: mill products except for imported fine or fermented flour imported from abroad, agricultural products sold in their natural states, including seeds, seeds, and seedlings, locally manufactured vegetables and fruits except for juices, pulses, grains, and salt. Food and manufactured spices, and freight services on what is imported from them, exceeding the tax due for these services that were not collected before the effective date of this law, sanitation services, purification or desalination of water except for bottled water, and prepared foods for animals, birds, and fish (preparations, additives, and concentrates of fodder).
