Law No. 67 for Egypt's new value added tax (VAT) regime has been ratified by the president and published in the Official Gazette on 7 September 2016. The main aspects of the new regime, which entered into force 8 September, are summarized as follows.
All natural persons and legal entities are required to register for VAT if their gross sales of both taxable and exempt goods and services equal or exceed EGP 500,000 (~USD 56,000) in the previous 12-month period. If the threshold is met, the taxpayer must register for VAT within 30 days of meeting the threshold. In determining if the requirement to register applies, sales before the law entered into force are included.
When registered, the tax period is monthly, with VAT returns due within two months following the end of each period even if no taxable sales were made. Failure to file by the deadline may result in a deemed assessment from the tax authorities and late payment will result in a penalty of 1.5% of the unpaid amount per month.
Supplies made by non-resident suppliers are subject to VAT. When supplies are made to an Egyptian resident not registered for VAT, the non-resident supplier is required to appoint a tax representative or agent in Egypt to fulfill the VAT obligations. If the non-resident does not appoint a representative or agent, the Egyptian resident is required to fulfill the VAT obligations on the supply, but retains the right to seek reimbursement from the non-resident supplier.
When supplies are made to an Egyptian resident that is registered for VAT, the Egyptian resident is generally responsible for fulfilling the VAT obligation, unless the non-resident has appointed a representative or agent for VAT purposes. Where the Egyptian resident has fulfilled the VAT obligations, an input deduction is generally allowed for the VAT paid on the supply.
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