Egypt

Value-added tax (VAT)

• In Egypt, VAT registration is mandatory for any person whose annual taxable turnover exceeds EGP 500,000, in accordance with the provisions of the VAT law.
• VAT returns are submitted through the Egyptian Tax Authority’s (ETA) electronic portal under the mandatory e-filing system, whereby taxpayers are required to file their monthly VAT returns electronically, with the deadline for both submission and payment of the VAT/schedule tax due being the last day of the month following the relevant tax period.
• As per the VAT Law No. 67 of 2016 effective 1st of July 2017, the standard VAT rate is 14% (previously 13%), which applies to all goods and services, except for machinery and equipment used in the establishment of production lines, which are subject to a reduced VAT rate of 5% (excluding buses and passenger cars).  

• A schedule tax is imposed on the sale of specific products and the provision of certain services listed in the schedule attached to the VAT law. It is important to mention that the schedule tax should be imposed only once on the listed products and services (e.g. professional services). The schedule tax is solely applied on specific listed items while it could be applicable in addition to the normal 14% VAT on some other items (e.g. air conditioners).  

• The VAT law provides a list of goods and services that are treated as exempt.  

• It is important to note that exported goods and services are subject to VAT at 0% rate, provided that certain conditions are fulfilled. 

• It should be noted that input VAT incurred in relation to goods and services that are subject to VAT exemption or schedule tax is neither recoverable nor refundable, in accordance with the provisions of the VAT law. 

• The VAT law stipulates that VAT on imported services received from non-resident suppliers with no PE in Egypt is to be accounted for by the local recipient under the reverse charge mechanism.

Law No. 3 of 2022

VAT Suspension on Machinery and Equipment  

• The recent amendments suspend the payment of VAT on machinery and equipment, whether imported or purchased locally for industrial purposes, for a period of one year from the date of their customs release or local purchase, extendable by an additional year. If the company demonstrates to the ETA that the M&E have been installed, are operational, and used in industrial production. If this is proven to the ETA, the M&E will be exempt from VAT. 

• The Egyptian government issued the executive regulations of Law No. 3 through Decree No. 24 of 2023, which amends specific articles of the executive regulations of the VAT law. This decree was issued in January 2023 and became effective the day after its issuance, and it sets out the conditions that must be fulfilled for the VAT suspension to apply. 

• For equipment imported or purchased from the domestic market that is wholly assembled, the producer must provide the concerned customs or tax authority, or the domestic seller, with documents confirming that the equipment is being used in industrial production. These documents should include:  

• A document approved by the competent technical authority confirming that the equipment is necessary for the licensed activity of the producer.  

• The producer's tax card or its VAT registration certificate. 
• A formal letter must be issued by the producer confirming responsibility for paying the suspended VAT amount, along with any applicable additional tax, in the event of non-compliance with the suspension requirements within the specified grace period. 

• For equipment imported or purchased from the domestic market in disassembled form or through fragmented shipments, the producer must provide the concerned customs or tax authority with documents proving that the parts are intended for assembling the equipment, which will be used in industrial production. 

Simplified Vendor Registration System (SVRS) 

• As per Art. No. 17 of Law No. 3 of 2022, the obligation to register under this system depends on the following: 

• Foreign suppliers rendering services to Egyptian individuals are obliged to register within 6 months from the activation of this system. 
• Foreign supplier selling taxable goods to Egyptian individuals are obliged to register within 2 years from the activation of this system. 

• Moreover, it is crucial to highlight that the simplified vendor registration system is activated by the ETA for foreign suppliers rendering taxable services, however, the system is yet to be activated for foreign suppliers selling taxable goods, since the integration between the Egyptian Tax Authority and the Egyptian Customs Authority (ECA) systems has not yet been finalized.
• The Ministry of Finance has recently issued Decree no. 160 of 2023 that includes guidance for the VAT on digital and other remote services provided by non-residents. Under the newly issued decree, non-resident entities that provide services directly to consumers (B2C) are required to follow the steps below:

• Simplified VAT registration: Non-resident service providers must complete a simplified VAT registration with the Egyptian tax authority.
• VAT collection and remittance: Once registered, non-resident entities are obligated to collect the applicable VAT on the services they offer to consumers. Then, they shall remit the collected VAT to the tax authority.
• Registration deadline: Non-resident entities must complete the registration process by 22 June 2023.

• For services provided to other businesses (B2B), the following rules apply:

• Reverse-charge mechanism: The responsibility for VAT payment shifts to the service recipient (the business receiving the services) through the reverse-charge mechanism. This means the recipient business calculates and pays the VAT on behalf of the non-resident service provider.
• Voluntary registration: Non-resident entities have the option to voluntarily register for the simplified VAT registration process. If they choose to do so:
  • They must collect the applicable VAT on their services.
  • They must remit the collected VAT to the tax authority.
  • In this case, the service recipient (the business) is not responsible for accounting or settling the VAT.

Law No. 157 of 2025

The Government of Egypt has issued Law No. 157 of 2025, which amends the VAT Law No. 67 of 2016. These amendments focus on adjusting tax rates for various goods and services including construction services, crude oil, etc.

Administrative Building

• Brand components (i.e., trade name, commercial branding) are applied to administrative buildings when the relevant conditions are met  

• In such cases, a schedule tax of 10% is applied, calculated on 10% of the rental or sale value  

Construction Services

• Construction services (which include supply and installation) and building works are now subject to VAT at the general rate of 14%, increased from the previous rate of 5%.  

• Input VAT recovery is now applicable for these services. 

Advertising Services

All advertising services are now subject to VAT at the general rate of 14%, except for advertisements related to healthcare advertisements for donations to non-profitable hospitals, and government institutions. 

Crude Oil

A one-time schedule tax of 10% will be applied upon the purchase of crude oil. 

Schedule tax on alcoholic beverages

• The taxation system for alcoholic beverages will shift from a proportional to a fixed-rate system, with progressive rates based on alcohol content. 
• Tax rates will increase by 15% annually for the first three years, followed by annual increases of 12% thereafter, starting from 2026, the provisions of these amendments will be in effect.  

Schedule Tax on cigarettes

The schedule tax has increased across all price categories per pack. Additionally, cigarette pack prices will increase annually by 12% for three years, starting in November 2025.

Decree No. 417 of 2025

On 23 December 2025, The Egyptian government issued the Ministerial Decree No. 417, amending the Executive Regulations of the VAT law No. 66 of 2017. These amendments refine key definitions and introduce regulatory updates addressing recent developments as a result of the issued Law No. 157 of 2025.

Indirect Inputs Definition 

• The definition of indirect inputs under the VAT law’s executive regulations has been refined to include construction and financing costs.
• This resulted in having the right to recover input VAT related to these services.

Input VAT on Inventory 

The amendments permit the recoverability of input VAT on inventory, provided the following conditions are met: 

• Supported by a valid e-invoice or relevant customs documentation
• Relates to revenues subject to the standard VAT rate of 14%
• Inventory is declared through Form No. 123 and submitted to the ETA by 31 December 2025.

If the input VAT was initially included within the company's costs, a proper accounting and tax adjustment must be made within one year from the purchase date.

Continuous Services 

• Article No. 43 of VAT Law’s Executive Regulations has been amended to provide a detailed definition of construction services, which includes supply and installation works. These amendments include building works, foundation works, steel structures, finishing works, marine and river works, electromechanical and electronic works, and works related to new energy powerplants.
• The amendment reaffirms that construction services are treated as continuous services, and therefore, the tax event will occur upon the issuance of e-invoice(s) or e-receipt(s) based on the Consultant-Approved Interim Payment Certificate

Input VAT Suspension on Machinery and Equipment 

• A new provision has been introduced to regulate the suspension of input VAT on machinery and equipment, whereas when production lines are acquired in a disassembled form or delivered through multiple shipments, the suspension of input VAT will take effect from the purchase date of the final shipment.
• This applies to machinery and equipment used for industrial purposes, whether purchased locally or imported.

Decree No. 418 of 2025

Following Decree No. 417 of 2025, a new Decree No. 418 was issued on the same day. This decree illustrates the VAT treatment for continuous contracts on construction services. 

• Continuous contracts related to construction services are subject to VAT at the standard rate of 14%, with the main contractors having the right to apply this rate for only 36% of the total invoice amount. In this case, the input VAT recoverability is not applicable.
• The classification of a continuous contract is:
  • Signed before the issuance date of Law No. 157 of 2025
  • Finalized after the law's enactment
  • Has at least one Consultant-Approved Interim Payment Certificate, e-invoice, or e-receipt issued before the law's issuance date.
• In the event of the contract renewal or expansion with a percentage exceeding the previously agreed upon in the main contract, it will be treated as new, and the total amount of the related invoices shall be subject to the standard VAT rate of 14%, with the corresponding input VAT fully recoverable.

Instruction No. 45 of 2025

The ETA issued Instruction No. 45 in December 2025 to unify the VAT treatment of exported services under VAT Law No. 67 of 2016 and its Executive Regulations

• The Instruction clarifies that exported services are services rendered from Egypt to non-resident recipients (B2B) and aims to prevent double taxation in cross-border transactions
• Services qualify for the 0% VAT rate if they are rendered remotely and not linked to immovable property or physical presence in Egypt, with full entitlement to input VAT recovery
• Services not eligible for zero-rating include those related to immovable property in Egypt or requiring physical presence of both supplier and recipient, which are treated as local taxable services
• The Instruction sets out documentation requirements to support the application of zero rate:
  • A signed contract outlining the parties, service description, payment terms, and duration to prove the transaction between the service provider in Egypt and its recipient abroad.
  • Electronic invoice(s) including detailed data of such service.
  • Copy of the proof of payment of the service value, adjustments between companies holding/parents & subsidiaries, or any other means of payment as mentioned in the VAT law.

Law No. 149 of 2026

On 28 July 2026, the Government of Egypt has issued Law No. 149 of 2026, amending certain provisions of the VAT Law No. 67 of 2016. The amendments introduce several VAT developments impacting businesses across various sectors, including industrial and medical activities, real estate, financial services and the oil and gas sector.

• Expansion of the VAT Suspension Regime: The VAT suspension regime has been extended to cover medical devices used in industrial production. In addition, the initial one-year suspension period may now be extended for one or more additional periods, provided that the total suspension period does not exceed four years, subject to approval by the Egyptian Tax Authority.
• Input VAT Deduction Allowed During VAT Suspension: Registrants making sales of machinery, equipment and medical devices covered by the VAT suspension mechanism may deduct the related input VAT from the output VAT due.
• Services related to transit goods: VAT is no longer due on services performed on transit goods, provided that transportation takes place under the supervision of the Customs Authority and in accordance with the Customs Law.
• VAT credit refunds: The period required for refunding an excess VAT credit balance has been reduced from more than six consecutive tax periods to more than four consecutive tax periods. For taxpayers with annual turnover not exceeding EGP 20 million, a period of more than three months is applied.
• New VAT treatment for certain non-residential premises leases: Leases of non-residential buildings or units used as independent premises for managing an activity are now subject to the standard 14% VAT rate. The exemption continues to apply to premises used for religious, charitable, social, educational or healthcare activities, and to other activities prescribed by Ministerial decision.
• Reclassification of Schedule Tax Items:
  • Natural gas is no longer VAT exempt and is now subject to schedule tax of EGP 20 per thousand cubic feet.
  • Gypsum is now subject to the standard 14% VAT rate instead of the 5% schedule tax.
  • Soap and industrial detergents for household use are now subject to the standard 14% VAT rate instead of the 5% schedule tax.
• Expansion and Revision of VAT Exemptions
  • The exemption now expressly covers the banking services of the Postal Savings Fund, financial services provided by the National Postal Authority, and non-banking financial services supervised and regulated by the Financial Regulatory Authority or the Central Bank of Egypt.
  • The VAT exemption has been expanded to cover a wider range of medical and assistive devices.

E-invoicing

As part of the digital transformation initiatives undertaken by the ETA and following the introduction of the e-filing mechanism, the Ministry of Finance issued Decree No. 188 of 2020, which introduced the electronic invoicing (e-invoicing) system in Egypt.

Effective July 2023, all taxpayers in Egypt are required to implement the e-invoicing system, as only E-invoices are recognized by the ETA as valid documentation for deductible costs and expenses.

Furthermore, following the issuance of Ministerial Decree No. 1206 of 2021, issued in July 2021, all governmental bodies have been prohibited from accepting paper invoices from their suppliers as of 1 October 2021.

Accordingly, any company dealing with governmental entities must be fully compliant with the E-invoicing requirements and ensure that all invoices are issued electronically prior to that date.

Customs duties

• The liability for customs duty rests with the person who is importing the goods from abroad.
• Customs duties are imposed on imported goods at rates that vary according to official categories. Average rates of duties range between 0% and 60% of the cost, insurance and freight (CIF) value.
• Higher rates (up to 135%) are applied for passenger cars, nonessential and luxury consumer goods, and alcoholic beverages.
• Regarding the importation of machines and equipment to be used for industrial purposes, the rate of customs duty that applies in this case ranges from 0% to 5% depending on the exact type of good (determined according to its customs code). However, it is worth noting that trucks and heavy equipment are generally subject to customs duty between the rates of 10% and 20%.
• In Egypt, the government is flexible with importing second-hand equipment, with an aim to encourage foreign investment.
• VAT applies on such imported products at 14% of the customs/import duty paid (the VAT base will be based upon the invoice value CIF, the customs duty, and other taxes).
• A contractor who intends to re-export plants and equipment after expiration of a contract may import the plant and equipment into Egypt free of customs duties if certain requirements were met.
• Under all circumstances, a fee at a rate of 2% monthly and up to 20% annually of the amount of customs duty due is imposed for each year or partial year the plant or equipment remains in Egypt before re-export. Note that it is effective for a period of one year and may be renewed after the approval of the Customs Authority.
• Also, customs tax amounting to 1% of the stipulated customs tax on the date of the temporary release shall be collected for every month or part thereof with a maximum of 10% annually for equipment, new and renewable energy components, and their spare parts.

Real estate taxes

The Real Estate Tax Law takes into consideration the different variables that can affect the value of a property, such as location, value of similar buildings, and the economic situation of the district in which the property is located. This is to be updated every five years.

Real estate tax is levied annually on all constructed real estate units, with the exemption of schools, orphanages, charitable organisations, and owner-occupied private residences whose annual rental value does not exceed the statutory exemption threshold.

Such tax is assessed based on the rental value of the land and building, and these value assessments are set by the committees, after approval of the Minister or whomever the Minister delegates, and published in the Official Journal. Based on the announcement, any taxpayer can appeal the rental value assessment.

The real estate tax rate is 10% of the rental value, and the calculation of the rental value differs for residential units and non-residential units. Specific percentages of deductions are provided by the law to account for all the expenses incurred by the taxpayer, including maintenance costs.

The real estate's definition was recently amended to replace the original land spaces’ provision by the following: 'Actually exploited lands, whether independent or attached to buildings, fenced or not (as determined by the relevant executive regulations).'

In addition, a new article was recently introduced to the Real Estate Tax Law, allowing by means of a decision from the Egyptian Cabinet, real estate tax exemption for the real estate actually exploited in the production and services activities stated by the Egyptian Cabinet, provided that the decision includes the below, for each production or service activity:

• The percentage of exemption.
• Its duration.

Stamp tax

There are two distinct types of stamp tax, which are imposed on legal documents, deeds, banking transactions, company formation, insurance premiums, and other transactions, as follows:

• The nominal stamp tax is imposed on documents, regardless of their value. The tax rate for items such as contracts is approximately 1 Egyptian pound (EGP) for each paper (per each copy of the document).
• Percentage or proportionate stamp tax is levied based on the value and nature of the transactions.

An annual proportional stamp tax at the rate of 0.4%, shared by the bank and the client, is imposed on a bank's loans. This stamp tax is due on a quarterly basis on the beginning balance of each quarter of credit facilities and loans and advances provided by Egyptian banks or branches of foreign banks during the financial year in addition to the amounts utilised within the quarter.

Loans from other establishments are not subject to this tax.

With the introduction of Law No. 30, minor changes took place with regards to the Stamp Tax Law No. 111 for 1980, namely, the following:

• 1% on each life insurance premium and 2% on each premium on illnesses, bodily injuries, or related civil liability, and on compulsory insurance premiums of any kind.
• 11% (previously 10%) of the insurance consideration for land, river, sea, and air transport, with a minimum of one pound.
• 11% (previously 10%) on each premium of other insurances and the consideration of these insurances, including insurance against war risks, with a minimum of one pound.

Stamp tax on the disposal of financial securities

Under Law No. 153 of 2026, stamp tax is imposed on the total value of transactions involving the sale of securities listed on the Egyptian Exchange (EGX), excluding listed investment certificates, without deduction of any costs. 

Each resident or non-resident buyer and seller is subject to stamp tax at a rate of 0.5 per thousand of the transaction value. 

For purchases and sales of listed securities carried out on the same day, each resident or non-resident buyer and seller is subject to stamp tax at a reduced rate of 0.25 per thousand of the transaction value. 

Transactions carried out by companies licensed to undertake market-making activities are not subject to this stamp tax, subject to the applicable conditions. 

The entity responsible for settling the relevant transactions is required to withhold and remit the stamp tax to the competent tax office within five days from the beginning of the month following the month in which the transaction took place, using the prescribed form. 

Payroll taxes

There is no payroll tax other than the employer’s social insurance contribution (see below).

Social insurance (employer’s contribution)

The social insurance contribution of the employer is 18.75% of the total social insurance salary.

Comprehensive health insurance system contributions

Egypt is embarking on implementing a new comprehensive health insurance system, starting from 2019. The legislation governing the new health insurance system entered into force on 12 July 2018. The system is intended to be implemented over a 15-year period through six phases, covering different governorates at each stage, with Cairo and Giza, among others, included in the final phase of implementation.

The new health insurance system is financed through several sources, including a 0.25% contribution on the total annual revenues of the relevant entities. Under Law No. 155 of 2026, this contribution is deductible for income tax purposes. The contribution is treated as tax revenue, and the ETA is responsible for its examination, assessment, and collection. The contribution is payable no later than the deadline prescribed for filing the relevant income tax return.

Other sources of financing include:

• EGP 0.75 on the value of each pack of locally produced or imported cigarettes sold, with such amount increasing every three years until it reaches EGP 1.50.
• 10% of the value of each unit sold of tobacco cut-filler products other than cigarettes.
• Fees ranging from EGP 1,000 to EGP 15,000 payable by hospitals, medical clinics, treatment centres, pharmacies, and pharmaceutical companies for participation in the new health insurance system.

Individuals wishing to benefit from the new health insurance system are required to pay subscription contributions depending on the category into which they fall, including the following:

• The employer pays a contribution equal to 4% of the employee's salary subject to social insurance, while the employee contributes 1%, resulting in a total contribution of 5%.
• The employee pays an additional contribution of 3% of the relevant salary base to insure one's spouse where the spouse is unemployed or does not have a stable income.
• The employee pays an additional contribution of 1% of the salary subject to social insurance for each dependant.
• Business owners, self-employed professionals, and Egyptians working abroad pay a contribution of 5% of the salary or wage subject to social insurance, or their income reported in the income tax return, whichever is higher.
• Foreign expatriates residing in Egypt may also be permitted to subscribe to the system, subject to the applicable conditions and reciprocal treatment by their home country.

The above subscription contributions become payable only once the new health insurance system is implemented in the relevant governorate. Accordingly, individuals residing in governorates that have not yet entered the implementation phase are not required to pay such contributions until the system becomes applicable there. The party collecting the subscription contributions is required to remit them within 30 days from the date of collection.

Non-compliance with the requirements of the new health insurance system may result in financial penalties and, in certain cases, imprisonment.