How to calculate VAT in Egypt 2021

How to calculate the value-added tax in Egypt 2021, as many people try to understand it or understand it more clearly, as we see many consumer products that we use throughout the day added to them with an added value above their real or real prices, regardless of the nature of the buyer or consumer.

How to calculate value added tax in Egypt

  • First of all, let’s explain what is meant by the term value added. The added value is one of the indirect taxes that many countries in the world, especially Egypt, apply to all goods, on the things in circulation or subject in our daily life. There are some commodities that are subject to trade laws, but are not subject to such taxes, and these goods are known as exempt goods, and we will mention a few of them in the following lines.
  • Value-added service is implemented in nearly 160 countries around the world, and the return of these taxes to countries is an important source of income for this country, which aims to increase both the budget and the standard of living in these countries. The country’s economy.
  • It should be known that value-added tax values ​​are applied to goods as a tax chain or link that extends to all stages of production of these goods, i.e., periods of production, storage and consumption of goods. product.

Now, how to calculate the value-added tax in stages in Egypt?

  • The method of calculating the value-added tax in Egypt has led to chaos and controversy between citizens and each other, which is important for merchants and business owners, especially in the category of consumed goods for the value-added tax. So that others can price their products on these taxes.
  • The value of taxes is calculated by subtracting the value of production, output or income from the input values ​​at the time of sale.
  • For example, while the value of outputs is estimated at two thousand pounds and the value of inputs is estimated at 800 pounds, for example the value-added tax rate here is estimated at 10%, and therefore tax = (2000-800) x 10% = 600.

So value tax value = 600 x 10%

  • But if the estimate of the output is estimated at 2000 pounds, for example, and the inputs are estimated at 800 pounds, for example, then the rate of value added here is estimated at 10% of the total value and thus the value of the tax = (2000-800) x 10% = 600.
  • So the value of VAT = 600 x 10%
  • Now we will include, for example, an example applied to a wheat farm using all wheat “seeds”, pesticides and fertilizers estimated at 20,000 EGP.
  • The farmer himself paid an estimated 5,600 pounds for the services provided by the workers plus the cost of the harvest, when the harvest came, and he sold the entire crop to a bread mill for 48,000 pounds.
  • Then a bread mill converts the wheat into flour where it is processed to roughly 6,400 pounds, and the wheat is then sold to a pasta production plant for roughly 64,000 pounds.
  • The factory started producing flour and converting it into Ezz pasta by adding a number of ingredients using specific techniques, and the total amount spent by the factory was estimated at 8000 pounds.
  • The factory began distributing and selling the noodles produced from flour to a commercial agency, for an amount of 104 thousand pounds, and the agency resold them to a retailer at an estimated price of 120 thousand pounds.
  • Suppose, for example, that a value-added tax is estimated at 10% so that a retailer begins distributing an estimated 136,000 pounds of pasta through his supermarket. It is estimated that the bakery reaches the consumer, so the value-added tax on the consumer is 10% x 136 thousand TL.

Method of calculating the tax exempt amount

If the merchant wants to know the net amount that he will receive without applying the tax, or if he wants to know his net profit after deducting the value of the value-added tax, here is the equation for calculating this equation and this equation: Net profit before tax addition = net profit after applying the tax ÷ (100% – Tax amount)

Goods subject to value-added tax in Egypt

Now, the following are the consumer products that are subject to VAT:

  • Cigarettes of all kinds.
  • Molasses and tobacco.
  • Kerosene, sun and gasoline derivatives from gasoline.
  • Diesel and diesel oil.
  • Excellent cooking oil.
  • Desserts, snacks, chips and crackers.
  • Contracting, construction and restructuring services.
  • Cleaning products, perfumes and soaps.
  • Home consumption tools.
  • Adapted transportation for both trains and buses.
  • Cinematic artworks.
  • Balance of recharge cards.
  • Screens above 32 inches.
  • Refrigerators for storing food over 16 feet.
  • HVAC systems.
  • Refreshments.
  • Make-up supplies.
  • Alcohol and wine.
  • Cars

Goods exempt from value-added tax

Now that we have considered the goods to be subject to the law of added value, let’s explain the goods that are not subject to this law as follows:

  • Dairy products for children or in general, as well as all products that enter dairy production by substituting one or more ingredients.
  • Baby food products.
  • Eggs unless pasteurized.
  • Sugar, coffee and tea.
  • Ground food grains other than imported fermented flour or otherwise known as fine flour.
  • All kinds of bread.
  • All kinds of pasta except semolina.
  • Meat of animals and poultry, whether live, fresh or frozen.
  • Fresh or canned vegetables, their varieties, and even the meats used to process them.
  • Frozen or fresh seafood from Asmaa and the like.
  • All food products from fish such as herring and tuna to caviar are subject to VAT.
  • Agricultural seeds are seedlings and seeds excluding tobacco and are subject to VAT.
  • A range of food grocery products such as tahini, white and black honey, halva.

The start date of the added tax

The value-added tax was first imposed in 2016 and was estimated at about 13% at that time, but then increased to 15% as it is levied directly on individuals when purchasing any of the goods subject to it. It is applied according to VAT and the difference in merchant category. Unless the rate of sales is higher than the purchase rate, the trading transaction is not applied to the trader and vice versa. Eligibility for merchant value added.


Source: موجز مصر by www.mogazmasr.com.

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