Tax exemptions are certain exceptions to the general tax system, primarily used as tax incentives within the framework of the State's fiscal policy. Exemptions generally waive the right to impose and collect taxes on revenues, in accordance with certain social and economic considerations.
Following the recent turmoil in the global economy, starting with the corona pandemic, and more recently, the economic challenges resulting from the Russian and Ukrainian conflict, many problems have arisen, including disruption within supply chains, increased shipping costs, and high inflation rates.
Egypt has witnessed unprecedented developments in the tax system, such as the introduction of Law No. 3 of 2022 which was issued to amend provisions within the Value Added Tax Law No. 67 of 2016. These amendments were applicable to the goods or services exported by projects in regions, cities, free markets, and economic zones of a special nature outside the country, exempting them from VAT tax. Similarly, goods or services imported by projects carrying out licensed activities within regions, cities, duty-free markets, and economic zones of a special nature, are also given the same exemption (excluding passenger transportation).
More recently, e-commerce transactions have been subject to tax through the application of a simplified registration and collection system, instead of through the appointment of a legal representative. Additionally, recent changes have included the application of an electronic invoicing and receipt system to allow consistent monitoring of business transactions between financiers and consumers by exchanging all invoice data in a digital format.
Furthermore, categories for tax refunds have also been increased to include goods and services subject to scheduled tax or taxes exempt abroad, taxes that were previously paid or charged on exported goods and services, regardless of whether they were issued in their original condition or altered/incorporated into other goods or services (as long as they do not exceed the credit balance of the goods and services for which the tax deduction is applicable).
In addition to refunding tax collected by default, credit balances that have passed more than six consecutive tax periods, tax previously paid on buses and passenger cars designated for the licensed activity of the facility, and tax incurred by a non-resident, are registered under the simplified supplier registration system for the purposes of carrying out its activity within the country.
Recently, a draft law was presented introducing new tax facilities for financiers and taxpayers to support economic activities and stimulate production. These allow delayed and additional tax to be bypassed, provided that all taxes due are paid no later than next June 30th. Exemptions to this include income taxes, stamp duty, and the development fee of the state's financial resources.
To conclude, the aim of this article is to highlight the state's endeavor to improve the tax system, advance economic development, stimulate investment, enhance tax compliance, and raise the overall efficiency of tax collection.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
