Google warns its users of Egypt’s imposition of a tax on technology companies

Starting from the first of next July, Egypt will start applying the value-added tax to companies that provide advertising and marketing services.

The companies that will be subject to this tax include “Google”, “Facebook”, “YouTube”, “Netflix” and “Tik Tok”, as well as electronic sales platforms.

Google’s message to its users revealed that the value-added tax (VAT) will be applied to its electronic services in Egypt at a rate of 14%, as of the first of next July.

The order includes all non-resident companies in Egypt that provide advertising and marketing services, as they must register with the tax authority and collect the value-added tax on the services they provide to persons who are not registered for tax, which are all the services they provide in return for money. As for free services, they will not be affected by VAT.

The companies targeted by the tax include Google, Facebook, YouTube, Netflix, TikTok, as well as electronic sales platforms and any other marketplaces that link suppliers and customers via the Internet.

For his part, the executive partner of BDO Khaled and Partners, Muhannad Khaled, said that Egyptian taxes apply what was stipulated in the value-added tax law, explaining that there is no new amendment to the law.

Khaled added, in an interview with Al-Arabiya, that the law requires companies or consumers in Egypt who use a service from abroad to apply value-added tax in various forms.

Khaled pointed out that this procedure includes the category that is not registered for taxation in Egypt, such as people, such as the services provided by “Google” in terms of improving the site or content services, films, music and subscriptions.

The Egyptian Tax Authority expects to collect about two billion pounds, equivalent to about $65 million, from this tax in its first year, and then it will gradually rise with the commitment of more companies.

Egypt’s general budget estimates proceeds from the value-added tax during the new fiscal year 2023-2024 at 575 billion pounds, or about $19 billion, an increase of 20.5% over the current fiscal year.

Egypt had joined the Organization for Economic Cooperation and Development agreement, which includes 136 countries. The agreement requires multinational companies to pay a fair share of taxes wherever they operate and make profits in different countries of the world.

The agreement is supposed to contribute to ensuring the redistribution of about $125 billion of the profits of major technology companies to other countries according to specific rules, so that each country gets its fair share of the tax on profits, in addition to imposing a minimum tax rate of 15% on multinational companies. .

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