Egypt implements notable alterations to Value-Added Tax (VAT) on specific products and services

The Egyptian Parliament has issued Law No. 157 of 2025, amending the Value-Added Tax (VAT) Law No. 67 of 2016, effective from 18 July 2025. This significant revision, announced by NTD's Tax Technical Knowledge Services group, aims to increase state revenue and enhance financial stability by adjusting taxes on cigarettes and alcohol, while also broadening the application of VAT.

One of the key changes is the shift in the VAT rate for contracting and construction services from a scheduled tax rate of 5% to a general VAT rate of 14%. Additionally, commercial trademarks, crude oil, and certain news/advertising services are now subject to VAT.

The amendments also affect the tax structure for cigarettes and alcoholic beverages. For cigarettes, a revised fixed tax amount based on the selling price has been implemented, with rates of EGP5, EGP7.5, and EGP8 per pack. Cigarette prices will increase by 12% annually for three years starting 5 November 2025. On the other hand, the amendments to the VAT on alcoholic beverages shift the tax structure to a fixed-amount basis, with new rates based on alcohol content and ranging from EGP2,800 to EGP4,800. These rates will be subject to an annual increase of 15% for the first three years, then reduced to 12%.

Commercial trademark rentals or sales are now subject to a 10% schedule tax. News agency services will now be subject to the 14% general VAT rate, allowing for input VAT recoverability.

Crude oil is now subject to a 10% schedule tax. Businesses are advised to assess their VAT obligations in light of the new law. Affected taxpayers should review the provisions of the Amendment Law and assess the impact on their current transactions to facilitate compliance.

For additional information, contact Ernst & Young Egypt, Cairo or Ernst & Young LLP (United States), Middle East Tax Desk, New York. The contact details for the mentioned professionals at Ernst & Young can be found in the Tax News Update: Global Edition (GTNU) version of this Alert.

It is important to note that the available search results do not provide information about the organization that enacted Law No. 157 of 2025. However, this significant tax overhaul is expected to have a substantial impact on businesses operating in Egypt, particularly in the tobacco, alcohol, and related industries.