April 6, 2021
Egypt to limit VAT input tax credit on paper invoices
On 8 March 2021, the Egyptian Ministry of Finance published Decree No.125 of 2021 in the Official Gazette. The Decree states that from January 2022, a business will not be able to deduct a value-added tax (VAT) input tax credit on a paper tax invoice unless the tax invoice is issued by a VAT payer that is not yet required to apply e-invoicing at the time of the supply.
The change will take effect in nine months. However, businesses should start to monitor their compliance, as well as the compliance of their suppliers, with the e-invoicing rules to reduce the risk of losing VAT input tax credits once the new rules take effect.
For additional information with respect to this Alert, please contact the following:
Ernst & Young Egypt, Cairo
Ernst & Young LLP (United States), Middle East Tax Desk, New York