Egypt plans to introduce VAT in 2015

In a recent statement, the Egyptian Minister of Finance announced that the legislation introducing a VAT system might be published in early 2015 (January or February). The proposed time of implementation would be at around the middle of the year to allow taxpayers to prepare their accounts, software and systems to apply the new tax.
In contrast to the current Sales Tax, the main features of the new VAT are likely to be:

  • Applicable to all goods and all services instead of just a few services;
  • Deduction of input VAT from output VAT;
  • Increased registration threshold (EGP 500k or EGP 1 Million – approx. USD 70,000 or USD 140,000 respectively);
  • The reverse charge will be applied;
  • Arms length rule for related party transactions;
  • Permanent Establishment and the concept of resident / non-resident will be considered;
  • Fiscal representation for non-residents;
  • Increased penalties and fines for tax evasion.

What does it mean for you?
The developments of the introduction need to be closely monitored to leave sufficient time to prepare for a VAT compliant operation in Egypt. For further information please contact Adballah El Adly, Partner of PwC Egypt (email:, tel: +20 (2) 2759 7700)

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