The latest amendments to the Unified Tax Law relating to paying value-added tax (VAT) in foreign currency does not apply to imports, explained Minister of Finance Mohamed Maait in an official statement on Monday.  

The minister shared that the new FX VAT regulation is mainly implemented on goods and services typically paid for in foreign currency from licensed entities, mentioning tourism services as an example.

The new amendment was introduced last week by the Ministry of Finance, which directed that value-added tax will be deducted in hard currency for those goods and services already purchased/invoiced using currencies other than the EGP.  

Businesses have the opportunity to settle their VAT payments in EGP if they are able to provide proof that the EGP given to the tax collector is equal to or above the value of the VAT within a month of the sale.

The new FX VAT is one of several measures implemented by the government to combat the ongoing foreign currency shortage caused by multiple portfolio outflows amid concerns over the economy due to the COVID pandemic and the Russian and Ukrainian war. The two caused approximately $20 billion, each, in foreign currency losses for the country.

The Egyptian government has upped efforts to attract foreign investments and hard currency, including its plan to bring in $191 billion by 2026 through a variety of initiatives and incentives. These include its privatization and IPO program, its new Golden Licenses, and a string of additional incentives for foreign investors.

Over the past few days, Egypt’s black market has raised its trading prices to EGP 50 per USD, around 40% lower than the official EGP 30 rate.