In its full session, the Egyptian House of Representatives agreed to a bill put forward by the government to change some parts of the law on value added tax made official by law no. 67 of 2016.
Some parts of the bill say that goods or services issued by special economic zone projects should be taxed the same way as goods or services issued by projects of regions, cities, and shops: duty-free outside the country or imported to it; also, goods or services issued by special economic zone projects should be taxed at a rate of zero; and finally, to encourage investment in special economic zones, goods or services imported for those projects should not be subject to value added tax.
The change includes Article 17, which says that anyone who sells goods or provides taxable services to someone who is not registered in the country and does not have a permanent establishment in Egypt must apply for registration under the simplified supplier registration regime set up by the executive regulation. This includes people who are not from Egypt and are not registered to do business there.
In the second paragraph of this article, it says that legal entities that do not sell goods or offer taxable services but are still required by paragraph (2) of this law to pay taxes on imported services must fill out an application to be registered for the reverse allocation system.
This article’s last paragraph says that it is only valid for six months after the date that the simplified registration system mentioned in the first paragraph goes into effect. It also says that the goods must be sold within two years of the date that the simplified supplier registry regime went into effect. This is because the simplified supplier registry regime for non-resident taxpayers is a “pay only” regime, which means that the input tax paid is paid abroad, so it does not affect their withholding provisions.
During the change project, series no. (4) was added to article 22, third paragraph, of the law to make it clear that the discount mentioned in the first paragraph of this article did not apply to cases of easier registration mentioned in the first paragraph of article 17.
The project includes adding the exemptions in Article 27(1) of the law for services given as gifts, donations, or honors to the State’s administrative apparatus or to local administrations, as well as giving the exemption to public entities. It also includes changing Article 30 to fix problems found in its practical application, such as the fact that it was not possible to refund the registration tax for goods and services that were subject to registration tax and exported abroad, or to grant exemptions for goods and services that were exported abroad, because there was not a credit balance for these goods and services. To fix this, a sentence was added to the first paragraph of Article 30 to allow the refund of the tax without going over the credit balance of the goods and services that are eligible for the tax deduction.
There is a new item number (5) that lets the non-resident member get back the tax they paid using the simpler registration system. There is also a change to item number (4) so that it can only receive back tax paid on buses and cars in use case. This is what the plant is allowed to do, and the last paragraph of the same article has been changed to include the phrase “except for the payment of the tax registered in the computer system of the authority.” In this case, the taxpayer does not need to show a certificate signed by an accountant registered with the Register of Chartered Accountants and Auditors proving their right to deduct or refund the tax.