Obliging foods manufactured or sold by online restaurants and shops to value added tax (VAT) is tax justice and supports fair competition, according to Reda Abdel Kader, head of the Egyptian Tax Authority (ETA).
Abdel Kader also said that, due to the novel coronavirus (COVID-19) pandemic, the Egyptian state has taken measures regarding restaurant and shop closures, and allowing sales through websites via delivery service.
This has led to the emergence of new entities, which are not yet registered with the ETA, that use electronic applications to sell food.
He added that this is due to the existence of a general text related to exempting food from taxes in general for restaurants and non-tourist shops, except for some of the categories stipulated by the Minister of Finance Resolution No 82 of 2017.
Abdel Kader pointed out that restaurants or stores that provide food through websites and which are not registered with the ETA, are obliged to register for VAT. This follows on from the issuance of the Ministry of Finance’s Decision No 285 of 2021, and covers entities with an annual turnover of over EGP 500,000.
He stressed that the decision to subject shops and restaurants that provide their services through applications and websites, and which provide delivery services, to VAT was necessary to achieve tax justice.
As for the delivery service, Abdel Kader clarified that it is a taxable revenue, and the tax-registered shipping company must collect the tax on the delivery service. This would then be supplied to the ETA as part of the service’s monthly returns.
Abdel Kader stressing that unregistered companies must register if the volume of their transactions reaches the registration limit.