⇒ Value-Added Tax
I. Taxable Persons
1. Producer, merchant or service provider, whose sales reach the registration threshold (i.e., 500 thousand in a year or part thereof).
2. Importer, exporter or distribution agent of a taxable commodity or service, whatever the volume of his dealings is.
3. Producer, provider or importer of a commodity or service, stipulated in the schedule, whatever the volume of his dealings is.
4. Every person who is non-resident and non-registered with the authority and sells commodities or renders services, subject to the tax, to a non-registered person within the country and who does not practice an activity at a permanent establishment in Egypt, shall appoint a representative or an agent thereof in Egypt to be responsible for carrying out all the taxpayer's obligations prescribed by this law including the registration with the authority and paying the tax, additional tax and other taxes due by virtue of the provisions of the present law.
II. Tax Rate
- The general rate of the tax imposed on commodities and services shall be (13%) for the fiscal year 2016/2017, and (14%) as of the fiscal year 2017/2018. In exception from the foregoing, the tax rate imposed on the machines and equipment used in producing a commodity or rendering a service shall be (5%), with the exception of buses and passenger cars, in addition to schedule tax for commodities and services subject to schedule tax.
- The tax shall be imposed at the rate of (0%) on the commodities and services exported.
III. Taxable Value
- The value that must be reported in the return shall be taken as a basis for the tax assessment, which is the actually paid value or that must be paid. It shall include:
1- All amounts collected from the purchaser or the service recipient under any name as long as they are on the occasion of selling the commodities or rendering the services.
2- All contingent expenses as commission costs, packaging, stowage, transportation and insurance imposed by the seller on the purchaser or the importer.
3- The value required to be declared in respect of the commodities or services used for private purposes shall be determined on the basis of total cost. The value required to be declared in respect of the commodities or services used for personal purposes shall be determined according to the market force and the transaction circumstances.
IV. Schedule Tax
- The value of the tax which shall be declared and taken as a basis for the schedule tax assessment, regarding the commodities or the services prescribed in the attached schedule shall be as follows:
1. As for the local commodities and services: It shall be the value that is actually paid or should be paid via any method of price payment according to the normal course of matters.
2. As for the imported commodities and services: It shall be estimated at the value taken as a basis for the customs duty assessment plus the customs duties and other imposed taxes and duties. The foregoing shall take place unless otherwise specified in the attached schedule.
V. Tax Deduction, Exemption and Refunding
- The registered taxpayer, upon calculating the tax, shall be entitled to deduct from the tax due on the value of his sales of the commodities and services, the tax previously paid or calculated in respect of his returned sales, and the tax previously charged to his inputs, and also the tax previously imposed on the commodities and services sold by him.
- The deduction shall be applicable to sales of commodities and services to foreign countries, international and regional organizations and petroleum and mining agreements, concluded with the Egyptian government, or to things bought or imported for personal use of diplomats.
- The sales of commodities and services financed by grants in whose regard a law has been issued to exempt same from tax.
The deduction shall be within the limit of the due tax. The portion not deducted shall be carried forward to the subsequent tax periods until the deduction is complete.
All commodities, equipment, devices and services, involved in this law, which are necessary for armament purposes for defense and national security, as well as raw materials, production prerequisites and components thereof, shall be exempted.
Deduction shall not apply to: Schedule tax, where no special text is provided for in the Law, input tax included among the cost, previously charged on commodity inputs and exempted services.
VI. Reverse charge
- In case a person, who is non-resident and non-registered with the authority, sells within the country to a registered taxpayer a service which is not required for practicing his activity, or supplies a service to a governmental entity or a public or economic authority or any other entity, the service beneficiary shall calculate the tax due on that service and pay it to the authority within thirty days as of the service supply date, in case the non-resident and non-registered did not appoint a representative or an agent thereof in Egypt.
- In case the registered taxpayer imports a service required for practicing his activity subject to tax, he shall be treated as an importer and supplier of that service at the same time.
- In case of non-payment of the tax in the specified time limit, the additional tax shall fall due, and be collected with the tax by applying the same procedures.
VII. Tax Return
Every taxable person shall submit to the competent Tax Department a monthly return stating the VAT and the due schedule tax, or either of them, as the case may be, on the Form prepared for such purpose, within the month following the end of the taxable term.
The taxable person shall also be bound to submit such return, even if he neither realised sales nor rendered services subject to the tax within the tax term.
* Disclaimer: This material has been prepared for general informational purposes only and is not intended to be relied upon as legal, accounting, tax or other professional advice.
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