File Photo: Workers at agriculture and fruit exporting company. AP
The new law, which was drafted upon the directives of President Abdel-Fattah El-Sisi, was approved by parliament on Sunday.
The law introduces exemptions from VAT on imported and exported goods and services for economic zone projects to attract more investments.
It stipulates applying a simple registration and collection system for the VAT on e-commerce transactions in the Egyptian market.
The law exempts the Suez Canal Authority’s services from the VAT, including passage fees.
Under the new law, tourists are allowed to reclaim the VAT on their purchases within three months of the transaction date for purchases over EGP 1,500.
Furthermore, the law allows repaying the VAT on exported goods without exceeding the credit balance of the imported goods and services.
In this respect, the law obliges all government bodies and public corporationss to submit the tax they have collected within 10 days of its due date.
The law also exempts services in vital sectors from the VAT to support industries, including high-quality flour for export, agriculture products, such as seeds and seedlings, as well as vegetables and processed fruits, alsprosthetics, dialysis devices and their parts, and vaccines.
The new law exempts all instruments and devices used in the production process in factories from VAT for one year.
In collaboration with the International Monetary Fund (IMF), the finance ministry drafted a medium-term revenue strategy with the objective of supporting Egypt's budget, targeting primary surpluses and creating room for priority spending on health, education, and social protection.
Egypt’s tax returns and VAT revenues jumped by 19.2 percent during the first five months of the current FY 2021/2022 to reach EGP 197.3 billion, according to the finance ministry.
VAT revenues climbed up by 11.9 percent year-on-year during the first half of FY2021/22 (July-December), recording EGP 157.4 billion, according to the finance ministry.
Ministry data shows that the country’s tax revenues represent over 79 percent of its total revenues recorded in the same period, posting EGP 390.6 billion.