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Wednesday, 15 May 2019

Government to collect VAT from download sites

EXCLUSIVE- Government to required download sites to charge and remit VAT: The Finance Ministry’s central value-added tax department is currently compiling a list of websites that charge for the download of books, movies, and songs, all of whom will be required to charge and remit VAT, VAT Department Head Sayed Saqr told Enterprise. The listing process is slow due to difficulties in finding accurate data on the size of these websites’ activities, but the government should be sending out tax claims soon, Saqr said.

In related news: Egypt-based digital marketers running social media advertising campaigns for overseas customers have started paying the government an 18% “estimated tax,sources familiar with the matter told Al Mal. Social media companies will not receive any tax payments, the sources note. Although they don’t make an explicit link, the sources could have been referring to reports on Monday that Facebook will begin charging Egypt-based advertisers an 18% VAT. Facebook, Google and Twitter will only be responsible for calculating and collecting the non-VAT tax on behalf of the authority, the sources added. A Tax Authority official quoted by Al Mal also pointed out that “advertising activities on social media platforms are VAT-exempt under current legislation.” The Finance Ministry has been pushing to have ads on social media platforms subject to a 15-20% stamp tax, treating them basically on par with print ads.

Background: The government wants to add around 500k new VAT taxpayers by 2020 and raise VAT revenues to EGP 364.6 bn in the next fiscal year, from EGP 312 bn currently. An official told us last month that the Finance Ministry is developing plans to impose VAT on all e-commerce platforms. Companies including Amazon’s Souq, Jumia and OLX would be required to charge VAT on all online sales.

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