The new amendments to the Value Added Tax (VAT) law will not affect the current value of the tax of 14 percent, Salah Youssef, the head of Research and Tax Policies at the Ministry of Finance revealed.
Youssef made his comments during a meeting on Tuesday, organised by the Egyptian Tax Authority (ETA), which hosted the Association of Tenth of Ramadan city investors.
Youssef also noted that the amendments include exempting commodities and services headed to projects established in economic zones from VAT in order to catalyse investments in such zones.
Commodities and services that the state’s bodies, public authorities, and local governance units obtained as donations will also be exempted from VAT.
The amendments allow the head of the ETA to release imported shipments, which are required for the production process, for three months until the shipment’s owner submits the necessary documents in a bid.
This amendment relieves investors from any delay fees in light of the state’s policy to ease any kinds of burdens that investors are likely to face, according to Youssef.
He also added that the amendments comprise new articles that tackle VAT transactions and their e-collecting procedures.
In November, Egypt’s cabinet approved the new amendments to VAT law no.67, passed in 2016, as the government seeks to upgrade its taxation system as a part of its structural reform programme.
In June, Minister of Finance Mohamed Maait said that this batch of amendments to the VAT law will not witness an increase in taxes on commodities bought online or purchased through traditional venues.
VAT has been applied on all commodities and services purchased from the Egyptian market since the VAT law came into effect in 2016, which also covers commodities purchased online.
Maait also noted that the proposed amendments should develop the mechanism by which VAT is collected from non-resident companies by the customs authority directly, making the process easier and more effective. He added that the new collection system has been designed in accordance with international standards.
The COVID-19 crisis has resulted in a drop in Egypt’s gross domestic product by EGP 130 billion, and the economic growth rate for FY2019/2020 has declined to four percent, down from the targeted six percent, according to the finance ministry.
Tax and non-tax revenues have dropped by EGP 124 billion as a result of the COVID-19 pandemic that has affected economic conditions globally, the ministry added.