- Expansion of the Tax Base: Egypt’s recent VAT amendments broaden the tax base in sectors such as construction, real estate, energy, tobacco, and alcohol, while preserving exemptions for essential goods. The reforms aim to enhance tax equity and compliance without increasing the general VAT rate.
- Specific Tax Adjustments: Key changes include a shift to a standard VAT rate of 14% in construction, full deductibility of input VAT for contractors, a 1% levy on administrative units in commercial areas, and strategic increases in “sin taxes” on tobacco and alcohol to align with global health initiatives and improve public finances.
- Impact on Businesses and Compliance: The amendments signal a more predictable tax environment, encouraging businesses to formalize their invoicing processes and adjust pricing models accordingly. By ensuring clarity in tax obligations and promoting digital compliance, Egypt’s reforms aim to bolster investor confidence and support sustainable economic growth.
Source Middle East Briefing
ETA announces targeted amendments to Value-added Tax Law
- Broadening the Tax Base: The Egyptian Tax Authority (ETA) has introduced limited amendments to the VAT Law aimed at expanding the tax base and correcting market distortions, while maintaining existing exemptions for essential goods, food, healthcare, and education, and without increasing the general VAT rate.
- Sector-Specific Changes: Key amendments include applying the standard VAT rate to the construction sector (previously at 5%), allowing contractors to fully deduct input taxes and reclaim VAT on qualifying purchases. Additionally, administrative units in commercial areas will be taxed at 1%, aligning their treatment with other commercial entities.
- Adjustments in Excise Taxes: The amendments also introduce a 10% tax on crude oil, expand cigarette tax brackets with a fixed increase of EGP 0.50 per pack, and implement a new progressive tax on alcoholic beverages based on alcohol content, reflecting the government’s commitment to addressing public health and economic standards while supporting local industries.
Source Daily News Egypt
Egypt Amends VAT Law to Expand Tax Base and Target Key Sectors, Effective November 2025
- Egypt’s House of Representatives approved amendments to VAT Law No. 67 of 2016 on 29 June 2025
- The amendments aim to broaden the tax base and improve fiscal sustainability without changing the VAT rate or exemptions for essential goods
- Crude oil is now subject to a 10 percent schedule tax, while petroleum products remain exempt
- Advertising and news agency services are now subject to the standard 14 percent VAT rate
- Construction services move from a 5 percent schedule tax to the 14 percent standard VAT rate, allowing full deduction of input VAT
- Administrative and commercial real estate units in malls or business centers incur a 1 percent levy, while non-commercial areas remain exempt
- Starting November 2025, tobacco products will see a 12 percent annual price increase over three years, with a fixed excise increase of EGP 0.50 per pack
- Alcoholic beverages will transition to a tiered fixed-rate tax based on alcohol content
Source: regfollower.com
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
