Egyptian tax regulator has recently issued a new document clarifying the VAT duties for foreign remote service providers. As stated in the Egyptian Tax Authority‘s guidelines, the new VAT regulation will come into power on June 22, 2023.
Following June 22, non-registered digital and remote service providers will have to start collecting and paying VAT. Based on the official definitions issued by the Egyptian Tax Authority, remote service is transactions that do not include selling physical goods or providing services via a physical connection. Among remote services are supplies of e-books, apps, games, website design and even legal, accounting or consulting services. Typically, it’s difficult to determine where a remote service is provided, but Egyptian Tax Authority defined that a remote service is held to be provided in Egypt whenever the buyer of the service is a taxable resident in Egypt.
Different rules apply to marketplaces. Marketplaces or electronic distribution platforms are considered deemed suppliers and are required to register in Egypt.
Non-resident companies providing digital services in Egypt will have to register for VAT once their turnover exceeds EGP 500,000 (approx. EUR 15,000) in the last 12 months. If a company provides consulting services, there’s no threshold — VAT registration should be initiated from the day the services start.
The VAT rate for e-services is 14%, and if a company is providing consulting services, the VAT rate is lower — 10%. It is worth knowing that Egypt accepts VAT remittances in EGP and in USD.
What concerns with B2B transactions, Reverse charge mechanism is used. The only requirement to treat customer as business customer is to receive valid TIN number.