Value Added Tax Law in Egypt and the New Amendments 2025

The Value Added Tax (VAT) Law in Egypt has undergone significant developments following extensive discussions within the House of Representatives. A specialized committee was convened under the chairmanship of the Speaker of Parliament on June 29, 2025, resulting in a package of major amendments affecting multiple economic sectors.

These amendments aim to strengthen state revenues, achieve tax fairness, expand the tax base, and reorganize tax exemptions and taxable activities in line with current economic conditions.

First: What Is the Value Added Tax Law?

Value Added Tax (VAT) is an indirect tax imposed on most goods and services at each stage of production and distribution, ultimately borne by the final consumer.
This tax system is one of the most widely adopted globally due to its efficiency in revenue collection.

In Egypt, the VAT law is continuously updated to keep pace with economic changes and regulate various commercial activities.

Second: Summary of the Key Amendments to the VAT Law 2025

1️⃣ Increase in Cigarette Tax and Introduction of New Price Brackets

The new amendments approved the following:

• An increase in taxes on locally produced and imported cigarettes.
• The introduction of new price brackets instead of traditional categories.
• The application of an annual increase to the minimum and maximum price limits at a rate of 6%.

⏳ This increase will apply for three consecutive years, as part of the state’s policy to reduce harmful consumption and enhance tax revenues.

2️⃣ Subjecting Commercial Outlets to VAT Based on Commercial Nature

One of the most significant amendments includes:

• Subjecting commercial outlets to VAT based on their commercial nature.
• Moving beyond reliance on legal form (sole proprietorship – company – establishment).

Accordingly, businesses carrying out the same commercial activity will be subject to the same tax treatment, ensuring tax fairness and preventing avoidance.

3️⃣ Amendment to the Taxation of Alcoholic Beverages

The amendments introduced a fundamental change in the method of taxing alcoholic beverages:

• A shift from ad valorem tax to specific (fixed) tax.
• Previously proposed annual increases of 20%.
• The annual increase was reduced to 6%.

This amendment aims to achieve relative price stability while ensuring sustainable revenue growth.

4️⃣ Removal of Tax Exemptions on Certain Goods and Services

Tax exemptions were removed from several goods and services, most notably:

• Crude petroleum, which is now subject to a tax rate of 10%.
• Certain news agency services.
• Advertising services.
• Some private medical services.

🔹 Important Exception:
Donations made to non-profit hospitals remain exempt from VAT.

5️⃣ Amendment to the Tax Treatment of Construction and Contracting Activities

The amendments introduced an important change affecting the contracting sector:

• Excluding construction and building contracting activities from the Schedule Tax.
• Subjecting them to the general VAT rate of 14%.

This change contributes to unifying tax treatment and enhancing transparency within the real estate and construction sector.

6️⃣ Amendments to the Exemptions Schedule and Addition of New Items

The amendments stipulated:

• The removal of certain items from the exemptions schedule.
• The addition of new goods and services subject to a VAT rate of 10%.

This comes as part of a broader restructuring of the tax system and expansion of the taxable base.

Third: Taxable and Exempt Activities Under the VAT Law

📌 Classification of Activities

• Activities subject to VAT from the first day with no registration threshold.
• Activities subject to VAT upon exceeding annual revenues or sales of EGP 500,000.
• Activities fully exempt under the law.

Each business entity must accurately determine its tax status to avoid penalties and sanctions.

Fourth: Obligations of VAT-Registered Companies

1️⃣ Monthly VAT Return Filing

Companies subject to VAT are required to:

• Submit a monthly VAT return.
• Pay the due tax within the same month of filing.

📌 Any delay in filing or payment may result in fines and late payment penalties.