The Egyptian government is studying imposing value-added tax (VAT) on multinational tech firms, El Watan reported.
A 14% VAT will be imposed on e-commerce sales in Egypt in two phases under amendments to the VAT Act being considered by the government.
The changes would be phased in over two years and would see international companies that do not pay tax in Egypt required to collect and remit 14% VAT on transactions for digital goods and services.
The first phase would cover providers of digital services. Platforms would begin collecting VAT and filing returns a maximum of six months after the law comes into effect.
Businesses that sell goods online would be in the second phase. They are expected to start complying with the amendments up to two years after they become the law of the land.
However, the upcoming e-commerce Act should set a tax framework for online ads and online product sales, as well as the operations of FAANG companies (Facebook, Amazon, Apple, Netflix, and Alphabet), which could also be affected by a proposed 15-20% stamp tax on social media purchases.
The government is also looking to increase its tax takings by 18% in the coming fiscal year (FY), which will raise revenues to EGP 983 billion compared to the EGP 830 billion forecast for FY2020/2021.
VAT revenues are currently expected to fall, with the draft budget forecasting EGP 390 mn in VAT receipts during FY 2021/2022.
