The amended VAT law focuses on expanding the tax base, addressing sectoral imbalances, and improving fiscal sustainability, while maintaining the current VAT rate.
Egypt’s House of Representatives approved a series of amendments to VAT Law No. 67 of 2016 on 29 June 2025.
The amendments aimed at broadening the tax base, correcting sectoral distortions, and enhancing fiscal sustainability without altering the general VAT rate or exemptions for essential goods and services.
Key changes include:
- Crude oil is now subject to a 10% schedule tax, repealing its previous exemption. Petroleum products remain exempt to avoid impacting domestic fuel prices.
- Advertising and news agency services are no longer exempt and are now subject to the standard 14% VAT rate.
- Construction services shift from a 5% schedule tax to the 14% standard VAT rate. Entities in this sector can now fully deduct input VAT on materials and subcontracted services.
- Administrative and commercial real estate units face location-based VAT treatment: units in malls or business centres now incur a 1% levy on sale or rental value. At the same time, those in non-commercial areas remain exempt.
- Starting November 2025, tobacco products will see a 12% annual increase in minimum and maximum prices over three years. A fixed excise increase of EGP 0.50 per pack has been introduced. Cigarette tax brackets have also been expanded.
- Alcoholic beverages will move from an ad valorem tax to a tiered fixed-rate tax based on alcohol content, aligning with WHO recommendations for better public health outcomes.
The changes will come into effect on 18 July 2025.
