Minister of Finance Mohamed Maait said that Law No. 3 of 2022, which was issued on Sunday and modifies some tax regulations, aims to reduce burdens on citizens and the national industry.
The law included new tax exemptions in relation to citizens’ standard of living and vital sectors that aim to support the economy and stimulate economic growth despite the international challenges after the pandemic.
In a statement issued by the ministry, Maait said that modifying some rulings of the VAT law comes within the framework of the state’s commitment to improving the tax system, encouraging development, and stimulating investment without imposing more burdens on citizens.
These modifications include providing the goods or services of economic zone projects with “zero tax” to encourage investment in economic zones.
Some e-commerce transactions will be subject to the taxes through a simplified system instead of one based on hiring a legal representative, in accordance with international standards and the requirements of foreign companies. It will also be in line with e-commerce applications.
Maait noted that all residents unregistered in the tax system who sell or offer services and do not do this activity through a permanent establishment in Egypt must submit a registration application.
The modifications also included allowing tax refunds on services and goods subject to or exempted from the table tax (excise tax) as long as they do not exceed the credit balance and services upon which there is a tax discount.
Maait explained that ministries, government bodies, and municipalities must directly submit their tax tables to the tax authority within 10 days from their due date and 20% of the VAT value should be submitted directly to the authority during that time. The registered entity can then deduct the amount from the rest of the tax value.
The list of goods and services exempt from value-added tax include:
- Mill products — except for imported fine or fermented flour imported from abroad.
- Agricultural products sold in their natural states — including seeds, locally manufactured vegetables, and fruits, except for juices, pulses, grains, table salt, and manufactured spices.
- Freight services exceeding the due tax.
- Sanitation services.
- Purification or desalination of water — except for bottled water.
- Prepared foods for animals, birds, and fish — preparations, additives, and concentrates for feed, except for what is used for feeding cats, dogs, and ornamental fish.
- Pulp of paper and writing and printing paper.
- Coins in circulation, along with commemorative coins and raw disks intended to be minted.
- Civil aircrafts, their engines, parts, components, spare parts, and equipment needed for their use, as well as the services provided for these aircraft.
- Wheelchairs and their parts and separate parts.
- Artificial body parts and their parts.
- Hearing aids for the deaf and their parts, and other devices that are worn, carried, or implanted in the body to compensate for a deficiency, disability, or infirmity and their parts and accessories.
- Dialysis devices and their parts and supplies — including artificial kidney filters, incubators, serums, vaccines, blood and its derivatives, and blood collection bags.
- Family planning methods.
- Non-tourist water transportation for people.
- Air transportation for people.
- Drugs and materials used in the production of medicine based on a decision issued by the Egyptian Drug Authority.
- Ads that are issued with the intention of informing the public authority’s orders, or to alert the public to the implementation of laws and regulations, or to raise awareness in general — ads issued by tourism and government information departments, ads for donations for treatment and medical care in hospitals and government institutes, forced sales ads, election ads, student ads, recruitment ads, missing persons ads — which means amending the exemption for advertising services so that it is limited to some advertising services and not others; applying to them the general tax rate of 14% only, which results in reducing the tax price and exempting it from the stamp tax, with the possibility of deducting inputs and preserving the tax proceeds received from advertising services.
- The services rendered by the Suez Canal Authority to ships transiting through it, including the fee for transit.
He added that the law introduced in Article 28 a new provision to suspend the payment of the tax due on machinery and equipment imported from abroad or purchased from the local market for factories and production units for use in industrial production for a period of one year from the date of their release or purchase from the local market.
Maait also pointed out that the law introduced a new provision to facilitate tax refunds for leaving the country for foreigners to activate incoming marketing tourism and urge them to acquire Egyptian products upon their return to their country, where they are entitled for a period not exceeding three months to refund the tax previously paid to the registered seller on purchases of taxable goods, provided that the tax is no less than EGP 1,500/bill.