The decision to impose a 14 percent value-added tax (VAT) on online deliveries by restaurants and shops is necessary to achieve tax justice, the head of Egypt’s Tax Authority, Reda Abdel-Kader, said on Thursday.
In press statements, Abdel-Kader said the recent decision was necessary to support fair competition in the tax system.
His statements come days after Finance Minister Mohamed Maait issued a decree amending the VAT law to impose the 14 percent VAT starting 4 June on online deliveries, which have been booming since the coronavirus pandemic last year took its toll on businesses due to restrictions, which included a nighttime curfew.
Per the decree by Maait, the decision applies to all restaurants and shops with over EGP 500,000 in revenues annually.
Prior to the new amendments, the VAT applied on some businesses and restaurants, including franchise chains, stores and restaurants in airports, shopping malls, and tourist sites, among others, per the 2017 act.
Abdel-Kader said that the new amendment comes after pandemic-related restrictions led to the emergence of several new entities, not registered with the authority, which use online apps to sell their products during the pandemic.
Egypt’s food delivery business has been flourishing in the past few years, as the expanding market of over 100 million continues to lure investors.
David Buttress, an entrepreneur who recently invested in Elmenus, an online food discovery and ordering company operating in Cairo and other cities in Egypt, told Al-Ahram Weekly earlier this year that Egypt’s food delivery business is worth almost $2.5 billion.
Egypt is targeting a 22 percent growth in revenues to EGP 1.36 trillion during the upcoming fiscal year 2021/2022 budget, according to a draft budget by the finance ministry.
The growth in revenues would be driven by an 18 percent jump in tax collection, bringing total revenues from taxes to EGP 983 billion during the next financial year.