Egypt Clarifies Tax Rules for Exported Services with New Guidance
Table of Contents
Published November 28, 2023 (Updated November 28, 2023)
Overview
Teh Egyptian Tax Authority (ETA) has issued complete guidelines clarifying the tax treatment of exported services, aiming to provide clarity for taxpayers and facilitate both domestic and international transactions. The new rules, detailed in Executive Instructions No. (45) for 2025, address the place of taxation, documentation requirements, and input tax credit eligibility. The guidance is available in both Arabic and English.
Key Provisions of the exported Services Guidelines
According to a statement by ETA head Abdel Aal, the place of taxation for exported services is generally determined by the location of the recipient of the service. This means that if the service is provided to a customer outside of Egypt, it is typically not subject to Egyptian taxes. Though, the service provider retains the right to deduct input tax credits related to the production of those services, either through the reverse charge mechanism or according to the tax laws of the recipient’s country.
The ETA specifically clarified that certain services are not considered exported, even if provided to a non-Egyptian entity:
- Services directly related to immovable properties located within Egypt.
- Services that necessitate the physical presence of both the service provider and the recipient within Egypt.
Comprehensive Guidance Manual Available
To assist taxpayers in understanding and applying the new rules, the ETA has published a detailed guidance manual. This manual covers:
- The definition of “exported services.”
- Rules for determining the place of taxation.
- Required documentation to classify a service as exported.
- Illustrative examples of tax treatment for common exported service scenarios.
The ETA emphasizes its commitment to clear dialog and providing guidance that simplifies tax obligations, fostering stability in both domestic and international business dealings.
The English version of the guidance manual can be directly accessed on the ETA’s website: Guidelines for Exported Services in Egypt (English).
Implications for Businesses
These guidelines are crucial for businesses in Egypt that provide services to clients outside the country.Understanding the rules surrounding the place of taxation and the documentation requirements is essential for ensuring compliance and avoiding potential tax liabilities. The clarification regarding services tied to Egyptian