Egypt

Egypt Ratifies VAT Law

Egypt Ratifies VAT Law

Egypt’s President Abdel Fattah el-Sisi has approved the VAT law completing the ratification procedures needed to bring in the introduction of VAT.

Egypt have been talking about making this change for a while now so for many it is a surprise that is has finally been ratified. This change to a VAT system from their current Sales Tax system will be a big change for Egypt, the bylaws for the new legislation will be issued within 30 days. The rate will come in at 13% for 2016/17 fiscal year then rise 1% to 14% the following year.

One of the governments aims with this VAT law is to increase VAT compliance and decrease Tax evasion. The VAT scheme will be implemented as a traditional VAT scheme where VAT is gathered at every stage of the production chain rather than just as a one-off at the end of the chain as is implemented now. There will still be a list of exempted goods/services.

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New Vat and GST Rates for 2015

New Vat and GST Rates 2015

Below is a list of Changes to VAT rates and introductions of VAT and rates as of or after 1st January 2015.

Europe

Czech Republic
Introduced an additional reduced VAT rate of 10%, their other VAT rates are currently 21% (since 2013) and 15% (reduced).

Luxembourg
Raised their VAT rates by 2% – with the standard rate going from 15%-17%, the 1st reduced rate went from 12%-14%, and the 2nd reduced rate from 6%-8%. However the 3rd super reduced rate remains at 3%. This is due to the EU digital download change. The boundaries for the VAT rates have also changed so some items now fall under different VAT rates.

For further reading please see our earlier posts:
Luxembourg VAT increase coming soon (posted 21-10-2014)
Digital media downloads force Luxembourg to raise VAT (posted 08-04-2014)

Rest of world

Bahamas
Has introduced VAT at a standard rate of 7.5%, this is currently the only rate but some goods/services are exempt or Zero rated. Having previously been a Tax haven and indirect tax free the Bahamas has now introduced VAT in order to apply for the World Trade Organisation. Companies in the Bahamas will now need to register for VAT.

Iceland
Iceland has now cut its standard VAT rate from 25.5% to 24% after reducing its sovereign debt from 90% to just above 70%. They have also abolished the commodities tax. However the reduced rate has now risen from 7% to 12%.

Sri Lanka
The standard VAT rate has been reduced from 12% to 11%. They currently have no reduced or additional rates. The boundaries for VAT have also changed so some goods that were exempt are now liable to VAT.

Malaysia
As of the 1st of April 2015, Malaysia will be introducing 6% GST. This is to replace the current Sales and Services Tax. Unlike the current Tax, GST is applied at multiple stages, this is to help reduce fraud.

For further reading please see our earlier posts:
Why MY GST is nothing like Singapore or Australia and more like Europe  (posted 02/01/2015)
Oracle R12 Malaysian GST 21 day rule  (posted 02/01/2015)
Are you ready for the 2015 Malaysian GST?  (posted 07/11/2014)

Peru
The Peruvian standard VAT rate has been reduced from 16% to 15%. The Sales Tax, which is 2%, will remain unchanged. The VAT rate may be further lowered in 2016 to 14% but nothing has yet been confirmed

Egypt
The Egyptian Government is looking at introducing VAT at a rate of 10-12% to replace its current GST system. The original date suggested was 2015 but nothing has yet been confirmed.

Is Egypt’s GST indirect tax GST?

GST or GST?

GST or otherwise know as ‘Goods and Service Tax’ is almost identical to VAT and as far as configuring this in an Oracle R12 or Oracle Fusion instance, it may as well be. However don’t be fooled by Egypt’s GST as it actually stands for ‘General Sales Tax’ and this is set up differently in Oracle, primarily there is no tax to recover.

Hopefully the plans to move to a VAT for Egypt will continue to evolve but no confirmation on this as yet.