Do business in FX? You won’t be able to settle your VAT dues in EGP after all:All businesses pricing goods and services in foreign currency will now have to settle their VAT dues in FX after the Finance Ministry scrapped a rule that would have allowed them to pay in EGP, according to a ministry document seen by Enterprise.

The background:

  • The rules: The ministry last month began requiring companies and sole traders doing business in FX to pay VAT in hard currency.
  • There was a degree of flexibility: Under the rules, the ministry said it would allow businesses to pay in EGP provided they had evidence that they had exchanged an equivalent amount of FX.

That flexibility is now gone: The ministry will no longer allow businesses to pay in EGP because there was no sure-fire way to verify whether they had actually exchanged hard currency, an official at the Finance Ministry told Enterprise. There was also no established set of rules to punish those that failed to follow the procedures, they said.

We should know more soon: The new rule will be published soon in the Official Gazette, and the ministry will issue detailed directives listing sectors that are required to pay their VAT dues in FX, a second ministry source told us.

What we know so far — from the Finance Ministry:

  • Importers are exempt;
  • VAT will only be collected in FX from companies that are licensed to transact in foreign currency, like tourism companies.
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