Global tech giant Google, has notified its users of imposing a 14% value-added tax on its electronic services in Egypt, starting July this year, to implement the Ministry of Finance’s decision to subject non-resident service providers to value-added tax.
It is estimated that this tax would mop up more than $64 million in the first year and rise gradually over the coming years, according to a report in Egypt Independent, the sister English-language publication of Al-Masry Al-Youm daily, which is Egypt’s flagship independent paper.
The Egyptian Tax Authority (ETA) published guidelines in February this year regarding the value added tax on digital services regime. Non-resident vendors of remote services to customers in Egypt are required to register under a new “simplified vendor registration mechanism” and charge VAT effective from 22 June 2023, the guidelines said.
In January this year, Egypt’s Finance Minister Mohamed Maait announced amendments to the executive regulations of the value-added tax law, to subject e-commerce transactions to tax through a simplified system, in accordance with international standards and requirements of foreign companies.
VAT on Unregistered Beneficiaries
Google will start collecting value-added tax on the electronic services it provides to people in Egypt who are not registered for taxation, in accordance with the Ministry of Finance’s recent amendments to the executive regulations of the value-added tax law to subject non-resident companies or persons, Advisor to the Head of the Egyptian Tax Authority Saeed Fouad said.
“The tax is imposed on services or goods provided to beneficiaries in Egypt who are not registered with the tax authority system,” he added.
Egypt aims to collect tax revenues worth $49.5 billion during the fiscal year 2023/2024, which begins in early July.
Through collecting tax on e-commerce, Egypt counts on the continued expansion of the tax community, improving the services provided to taxpayers, applying the tax law on free professions and the expansion of registration of self-employed persons to broaden the tax base.
Speaking to CNN Arabic, Fouad explained that the VAT law requires companies abroad to pay a VAT of 14 percent for the services or goods it provides to beneficiaries inside the country.
“The law requires non-resident companies to collect this tax and import it to Egypt, according to an international cooperation protocol,” he added.