The Egyptian Tax Authority (ETA) has recently published Value-Added Tax (VAT) Guidelines for digital services and other remote services
The Egyptian Tax Authority (ETA) has recently published Value-Added Tax (VAT) Guidelines for digital services and other remote services provided by non-residents (see the Guidelines at this Link). According to the Ministerial Decree no. 160 for the year 2023 (an Arabic version of the Ministerial Decree at this Link), the Guidelines outline the VAT obligations for non-resident vendors who render digital and remote services to customers in Egypt through various platforms, including websites, social media stores, and applications. The guidelines will become effective on 22 June 2023.
As specified in the guidelines, any non-resident vendor who provides digital and remote services to customers in Egypt must pay VAT in Egypt on those services. Remote services are defined as any services where there is no necessary connection between the physical location of the recipient and the place of physical performance. This includes services such as supplies of digital content, online supplies of games, applications, software, website design, and publishing services, as well as legal, accounting, or consultancy services.
However, the VAT obligations for non-resident vendors differ depending on whether the remote services are rendered to a registered taxpayer (B2B supplies) or a non-registered consumer (B2C supplies).
• In the case of B2B supplies, the resident taxpayer is required to account for and remit VAT using the reverse charge scheme, with no obligation for the non-resident to charge or remit VAT.
• In the case of B2C supplies, the VAT obligations depend on whether the remote services are rendered via the non-resident vendor's own portal or application, or through an Electronic Distribution Platform (EDP).
To register under the simplified registration regime, non-resident vendors must create an account on the ETA website (at this link and a demo of how to create an account at this link) and to meet certain conditions, such as a turnover of EGP 500,000 in any 12 months. If the service is a professional and consultancy service subject to the reduced VAT rate, registration is required regardless of turnover. Once registered, non-resident vendors and EDPs are able to file simplified returns and pay the VAT due and may also apply for deregistration in case they cease to carry out taxable activities in Egypt.
It is important for non-resident vendors to comply with the guidelines to avoid any penalties or legal issues. The guidelines also cover specific invoicing requirements, record-keeping requirements, tax refunds, and certain other matters. For more information, the ETA has provided frequently asked questions and an appendix listing exempted services in the Guidelines.
In summary, the ETA's VAT Guidelines for digital and remote services are intended to ensure fairness and consistency in the taxation of such services. Non-resident vendors who provide remote services to customers in Egypt should review the guidelines carefully and take the necessary steps to comply.
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