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Understanding SaaS Sales Tax in Egypt: A Comprehensive Guide for Businesses

In Egypt, the standard VAT rate for SaaS and other digital services is 14%. The VAT obligations for non-resident vendors differ depending on whether the remote services are rendered to a registered taxpayer (B2B supplies) or a non-registered consumer (B2C supplies).

In the case of B2B supplies, the resident taxpayer is required to account for and remit VAT using the reverse charge scheme, with no obligation for the non-resident to charge or remit VAT.

In the case of B2C supplies, the non-resident vendor should collect and file the appropriate VAT to the Egyptian authorities.

Companies must keep precise and comprehensive records of all transactions that are subject to VAT. These records should be retained for a minimum period of five years and must be readily accessible for review by the Egyptian Tax Authority (ETA) when required.

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Egypt implemented a VAT system in 2016, aiming to modernize its tax framework and enhance revenue generation.

Official government link: Egyptian Tax Authority

14.00%

E-products and services VAT/Sales tax rate

税率降低的产品类别

No digital goods or services with reduced tax in Egypt

免税产品类别

Some educational material may be exempt in Egypt

Reverse charge mechanism for B2B sales

Yes

Tax ID validation required

Yes

When do you have to register

Once the threshold has been exceeded

可在线注册

Yes

Local representative needed

Not mandatory

注册流程

Non-resident digital providers that have exceeded registration threshold in Egypt, must register under a simplified vendor registration regime within 30 days of the month following the month in which the VAT obligations in Egypt have occured. The main action is account creation on the website of Egyptian Tax Authority.

There the following information has to be provided:

Country of tax residence;
National TIN;
Business address;
Name of the person who is responsible to contact with Egyptian Tax Office;
Telephone number and email of contact person;
Website`s URL.
Non-resident digital service providers are not obligated to have a fiscal representative in Egypt.

List of digital and electronic services liable for tax

Digital materials (such as video, music, apps, games, and e-books downloads)
Services related to software (like anti-virus programs and similar)
Services for website creation or publishing
Content licensing
Content based on subscriptions (including online gaming, music, video streaming, and online newspapers)

Penalties

The consequences for not adhering to VAT rules in Egypt can be quite serious and encompass:

– Delayed registration: This can result in a fine that could reach up to EGP 10,000.
– Late submission of returns: This attracts a penalty of 1% of the due tax per month, capped at a maximum of 5%.
– Inadequate record-keeping: This could lead to a fine that varies between EGP 5,000 and EGP 50,000.
– Providing incorrect or deceptive information: The penalties for this can range from 100% to 200% of the unpaid tax.

Registration threshold

EGP 500.000 USD 10.500

Filing interval

Monthly

Filing deadline

End of the month following the tax period in which the transactions occurred

E-invoicing requirements

Yes

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AT Requirements for Businesses: A Guide to Compliance

The ETA requires businesses to file VAT returns electronically in Arabic through its online portal. The filing frequency is monthly, and the payment deadline is the end of the month following the tax period in which the transactions occurred. If you are dealing with a business headquartered in another country, you may need to comply with that country’s VAT regulations as well. However, in some cases, the customer’s location may not affect your VAT obligations, particularly if the customer is considered a final consumer. It is essential to consult with a tax professional in both your own country and the customer’s country to determine your specific VAT obligations.

E-Invoicing and VAT in Egypt

E-invoicing is becoming increasingly common in Egypt and is required by law for certain businesses. E-invoicing can help businesses manage their VAT compliance more efficiently and reduce the risk of errors. While Egypt allows for the use of certain foreign VAT identification numbers, the country does not currently offer a reverse charge mechanism for cross-border transactions. It is important to stay up-to-date on the latest VAT regulations in Egypt, as they are subject to change.

What are the basics of SaaS sales tax for businesses in Egypt?

The standard VAT rate on SaaS and other digital services in Egypt is 14%. There are some exemptions, such as for educational materials. Businesses must file VAT returns electronically in Arabic through the ETA’s online portal. The filing frequency is monthly, and the payment deadline is the end of the month following the tax period in which the transactions occurred.
How can SaaS companies comply with sales tax regulations across different regions?

To comply with sales tax regulations across different regions, SaaS companies can use an integrated tax management solution. This includes registering for VAT in each jurisdiction where they have taxable sales, filing VAT returns, and remitting VAT payments. Companies should also keep comprehensive records of their transactions for VAT purposes.
How does customer location affect SaaS sales tax obligations in Egypt?

If the customer is located in Egypt, the SaaS company is generally required to charge VAT on the sale of the software. However, if the customer is considered a final consumer, the SaaS company may not be required to charge VAT. It is essential to consult with a tax professional to determine your specific VAT obligations.

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