How to prepare the monthly VAT return in Egypt

A VAT-registered company in Egypt files one return every month, by the end of the following month, on the Egyptian Tax Authority (ETA) portal. The return reports output VAT charged on sales (14% standard rate) minus input VAT paid on purchases. A positive result is paid; an excess credit is carried forward. A return is due even for a month with no sales.

Who has to register and file

VAT in Egypt is governed by the Value Added Tax Law No. 67 of 2016, and the procedures for filing and payment by the Unified Tax Procedures Law No. 206 of 2020. A business must register once its taxable sales reach the registration threshold (EGP 500,000 over the previous twelve months at the time of writing). Some activities must register regardless of turnover, and a business below the threshold can choose to register voluntarily.

Once registered, the company files a return for every monthly tax period, whether or not it made any sales that month.

Output tax, input tax and the amount due

Output tax is the VAT you charge customers on taxable sales. Input tax is the VAT you paid suppliers on purchases used in your taxable activity. The return nets the two: output tax minus deductible input tax is the amount payable for the month. If input tax is larger, the difference is a credit carried forward to the following months; cash refunds are limited to specific cases set by the law.

The standard rate is 14%. Some goods and services are exempt, zero-rated (such as exports) or subject to the separate table tax, so each sales line must carry the correct tax treatment, not just a flat 14%.

Step-by-step checklist before you file

1. Close the month's sales: every sales invoice and credit note (sales return) for the period is issued and recorded.
2. Close the month's purchases: collect supplier tax invoices and debit/credit notes, and check each one shows the supplier's tax registration number.
3. Reconcile the VAT accounts: output VAT in the ledger must equal the tax on the month's sales register, and input VAT must equal the tax on the purchase register.
4. Match against e-invoices: where you or your suppliers issue ETA e-invoices or e-receipts, make sure the documents in your books agree with what the ETA has received.
5. Exclude non-deductible input tax, such as tax on purchases not used in the taxable activity or on invoices that do not meet the legal conditions.
6. Bring forward any credit balance from the previous return.
7. Fill in and submit the return on the ETA portal before the deadline, then pay any amount due.
8. Post the settlement: clear output and input VAT into a VAT payable (or receivable) account, and record the payment when it is made.
9. Keep the working papers — registers, reconciliations and the submitted return — with the month's records.

The journal entries behind the return

During the month, each sale credits Output VAT and each purchase debits Input VAT. At month end the settlement entry debits Output VAT and credits Input VAT for their balances, with the difference credited to VAT payable (or debited to a VAT credit account). When the tax is paid, VAT payable is debited and the bank is credited.

Keeping the three accounts separate — output, input and payable — is what makes the return reconcilable to the ledger line by line.

Common mistakes

• Skipping the return for a month with no sales. A nil return is still required.
• Deducting input tax from invoices that lack the supplier's registration number or were issued to a different company name.
• Forgetting sales returns and credit notes, which reduce output tax in the month they are issued.
• Applying 14% to exempt or zero-rated items.
• Filing figures typed from memory instead of from reconciled ledger balances.