EGPC to absorb new natural gas tax as the government targets EGP 40 bn in revenue

The Finance Ministry and the Egyptian General Petroleum Corporation (EGPC) have worked out how the new tax on natural gas will actually get paid. The EGPC — not gas suppliers, and not households — will be the one writing the check, a senior government official tells EnterpriseAM.

Here’s how it will work: Gas-supply companies will log their sales with the EGPC, which will then take on the paperwork. The EGPC will issue the e-invoices and forward the owed tax to the Egyptian Tax Authority within 10 days of each payment becoming due, per instructions the authority is finalizing now, the official says. The expected proceeds are around EGP 40 bn, with the amount to be settled periodically against the state’s petroleum-subsidy dues to the EGPC.

BACKGROUND- The government scrapped the VAT exemption for natural gas back in June as part of a broader tax incentive package, moving it instead under a flat EGP 20-per-thousand-cubic-feet schedule tax. The House signed off on the package later that month, putting the change into law, but the mechanics of who actually pays — and how — were left for later. The arrangement echoes how another dispute was resolved last year, when the Finance Ministry’s decision to impose a 10% VAT on crude oil sales triggered a stand-off over who should issue the e-invoices. The Tax Authority eventually ruled that the EGPC would remit the tax on behalf of oil companies and give them clearance, while the companies continued to issue e-invoices without bearing any extra tax cost.

A business-to-business tax: The entity buying the gas — not the end consumer — is on the hook, meaning nothing changes for household gas bills, according to our source. This mechanism only applies to domestic gas companies, unlike the separate 10% VAT recently placed on crude oil, which does reach foreign exploration and production firms.

Also in the VAT rulebook

The executive regulations for the VAT-law amendments remain a work in progress. A government committee is still trying to resolve how the new levy on non-residential property sales and leases will apply in practice, according to the official. The key unresolved question concerns whether the tax will be restricted to premises used as an entity’s administrative headquarters or will also capture customer-facing sites where the activity is conducted, such as shops, clinics, and law offices. The distinction matters because the Finance Ministry had previously looked to limit the 14% VAT to purely administrative premises, keeping factories and buildings that provide direct services outside the net.

The fiscal stakes are rising: Preliminary estimates now put expected VAT receipts from administrative office space at EGP 41 bn, up from an earlier estimate of EGP 35 bn, the official says.

ALSO- The Tax Authority is preparing instructions to operationalize the recently enacted exemption for production inputs used in assistive devices, bringing their treatment in line with dialysis equipment and its inputs. That builds on the VAT amendments’ broader medical-device relief, which cuts the applicable rate on qualifying medical equipment to 5% and expands the exemption framework for specified medical aid and inputs.

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