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Monday, 26 October 2020

VAT Act amendments submitted to Egypt’s House of Representatives

LEGISLATION WATCH- Office space and snack tax? Amendments to the VAT Act that would impose VAT on non-residential property and some snack foods are now with the House of Representatives after going through Cabinet, the local press reports. The changes would apply a 14% VAT to the rent and purchase of commercial and administrative properties, while the 5% schedule tax on crackers and sweet pastries would be replaced by the standard VAT rate. The amendments, which were signed off by the cabinet’s economic committee in June, would also subject most commercial advertising to the tax but scrap the 20% stamp tax on ads, and allow tourists to claim VAT rebates.

Real estate developers have pushed back against plans to end the VAT exemption for non-residential properties, suggesting that businesses already struggling through the coronavirus pandemic will not be able to cope with the additional costs. The government argues that the changes are necessary to close loopholes in the legislation, which impose VAT on some commercial properties — such as stores located in malls — but not others.

In other VAT news, FinMin renews agreement with Lawyers Syndicate on VAT: Attorneys will keep paying a flat VAT rate on their services under a renewed agreement (pdf) between the Finance Ministry, the Lawyers Syndicate, and the Justice Ministry. The agreement sets VAT on legal services and court proceedings undertaken by law firms. VAT for proceedings in the Court of First Instance was unchanged at EGP 40 and those in the Court of Appeals at EGP 60. Lawsuits filed in the courts of cassation, administrative, constitutional, and international arbitration will also incur the same VAT of EGP 200. The agreement was last renewed in September 2018 after it was initially inked in April 2017. Lawyers had been opposed to the initial agreement and further increases.

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