Imports not charged new FX VAT, finance minister

Cairo – November 28, 2023: Minister of Finance, Mohamed Maait, shared that the new value-added tax (VAT) in foreign currency does not apply to imports, mitigating some importers’ concerns over the latest amendments to the tax law.

Last week, the Ministry of Finance announced new amendments to the Unified Tax Law, introducing a new foreign currency VAT to be collected for goods and services purchased/invoiced using currencies other than the Egyptian pound.   

In a statement on Monday, Maait explained that the new tax would be mainly collected from goods and services typically paid for in foreign currency from licensed entities, mentioning tourism services as an example.

Businesses have the opportunity to settle their VAT payments in the local currency. Tax collectors may accept payments in Egyptian pounds if businesses can provide evidence that the amount is equal to or above the value of the VAT within a month of the sale.

The new amendment is part of the government’s efforts to curb the foreign currency shortage. The Egyptian government has implemented several initiatives and incentives to combat the shortage by attracting foreign investments and hard currency.

These include its privatization and IPO program, its new Golden Licenses, and a string of additional incentives for foreign investors.

Egypt continues to increase its efforts and diversify its FX inflows after several economic shocks caused by the pandemic and Russian and Ukrainian war, which led to a significant outflow of hard currency of around $20 billion respectively.

Over the past few days, Egypt’s black market has raised its trading prices to LE 50 per USD, around 40 percent lower than the official LE 30 rate.