On 27 November 2025, the Egyptian Tax Authority (“ETA”) issued Implementation Instructions No. 45 of 2025 (the “Guideline”), introducing a comprehensive and practical framework for the VAT treatment of exported services.
The Guideline consolidates the applicable place of taxation rules, sets out mandatory documentation for applying the zero-rate, and clarifies refund eligibility, supplemented by illustrative scenarios for B2B cross-border service arrangements. We summarize the key provisions below:
Key Takeaways:
- Exported services supplied from Egypt to non-resident recipients are zero-rated for VAT.
- Zero-rating requires proper documentation, including:
- A written contract specifying the parties, service nature, payment terms, and duration.
- An ETA-compliant electronic invoice.
- Proof of payment.
- Certain services remain taxable in Egypt, including:
- Services related to immovable property located in Egypt.
- Services requiring the physical presence of both the provider and the recipient in Egypt.
- Exported services remain taxable at 0%, allowing full deduction of input VAT incurred.
- Businesses can claim refunds for excess input VAT through the ETA’s refund mechanism, provided all procedural requirements are met.
1) Definition and Scope
The Guideline confirms that an “exported service” is one supplied from inside Egypt to a recipient located outside Egypt, whether rendered by:
- A service provider resident in Egypt;
- A service provider having a permanent establishment in Egypt; or
- A non-resident service provider rendering the service from within Egypt.
2) Place of Taxation Rules
In alignment with international VAT principles, the Guideline provides that:
- Remote services supplied to a non-resident customer are zero-rated.
- VAT taxing rights shift to the customer’s jurisdiction, typically through the reverse-charge mechanism or any equivalent VAT system applicable in that jurisdiction.
- Exceptions, which remain taxable in Egypt at domestic VAT rates, include:
- Services related to immovable property located in Egypt.
- Services requiring the physical presence of both the provider and the recipient in Egypt.
3) Documentation Requirements
To apply zero-rating, the Guideline requires maintaining clear, contemporaneous documentation, including:
- A written contract setting out the nature of the service, the parties (Egyptian provider and non-resident recipient), payment terms, and duration.
- An electronic invoice issued through ETA systems, accurately reflecting the value and description of the service and identifying both parties.
- Proof of payment of the service value, such as bank transfer records or bank statements; intra-group adjustments may be accepted where applicable.
4) Input VAT Deduction and Refunds
Exported services retain their status as zero-rated taxable supplies. Accordingly, the supplier is:
- Entitled to a full deduction of input VAT incurred in connection with the exported service; and
- Eligible to recover any excess input VAT through the ETA’s refund mechanism, subject to compliance with the prescribed procedural requirements.
What to do?
Businesses providing cross-border services should review existing service flows, ensure documentation meets the updated standards, verify compliance with e-invoicing requirements, and prepare refund files where material input VAT accumulates.
For any questions or inquiries, please feel free to contact:
Omar S. Bassiouny
Founding Partner and Group Head of Corporate and M&A
Mayar Sharafeldin
Associate and Co-Head of Tax