Egypt: Ministry of Finance Sets a General Framework for Application of VAT

Cooperation Protocols Are Signed Between Tax Authority and Egyptian Cinema Industry Chamber, Syndicates of Musicians, Cinema & Theatrical Professions

Mr. Almonayar: The signed protocols come within the Ministry's efforts to lay down a fair tax system.

Aiming to boost cinema industry, movies &TV works to be levied zero-rated tax.

Levying 10% tax on works performed by members of Syndicates of Musicians, Cinema & Theatrical Professions.

Producers of movies & TV works shall register at the Tax Authority and pay 5% VAT

A joint committee to be formed to settle any disputes between protocol- involved parties, all members are urged to voluntarily be tax committed Mr. Amr Almonayar, Vice Minister of Finance for Tax Policies, announced that cooperation protocols were signed between the Egyptian Cinema Industry Chamber (ECIC) and the three Syndicates of Musicians, Cinema and Theatrical professions in order to establish procedures for VAT payment

. The move aimed at laying down a fair tax system that encourages voluntarily tax commitment and enhances mutual trust between all community classes and Tax Administration, stressed Finance Minister Mr. Amr Al-Garhy, as quoted by Mr. Almonayer.

Mr. Almonayer added that the Ministry of Finance worked hand in hand with the Tax Authority to achieve this target, pointing out that such protocols were indicative of the Ministry's approach to facilitate procedures for all VAT taxpayers and for young syndicate members, in particular.

This one-year protocols set out a general framework for applying VAT on works performed by members of the ECIC and the three said artistic syndicates.

In attempt to promote cinema industry, the protocols stipulated levying a zero-rated VAT on cinema and TV works as applicable with the Egyptian exported goods and services, noted Mr. Almonayer.

The cooperation protocols were signed by Mr. Emad Samy, Head of the Tax Authority, Mr. Farouk Sabry, Chairman of the ECIC, Mr. Omar Abdel Aziz, Head of General Union of Professional Syndicates of Theatre, Cinema & Music, Singer Hany Shaker, Head of the Syndicate of Musicians, Actor Ashraf Zaki, Head of the Syndicate of Theatrical Professions, and Mr. Mousad Fouda, Head of Syndicate of Cinema Professions.

Mr. Almonayer, also stressed that the cooperation protocols fall within the Ministry's responsibility in opening communication channels with all professional organizations, businessmen associations and investors in attempt to achieve objectives of the taxation system as being one of the pivotal mainstays of the national economy.

He further added that members of the ECIC and the aforementioned three syndicates stressed their compliance with tax laws and provisions and confirmed the compliance of all producers of media works with registering at the Tax Authority and paying 5% tax rate schedule on all their works

. Moreover, workers performing professional and consultant services are legally obliged to register at the Tax Authority and pay 10% tax rate schedule on their activities.

Commenting on the main points stated in the cooperation protocol, Mr. Almonayer noted the following

The protocol is applicable on all movies after being finally produced and their revenues being generated from all sources; namely, whether from local revenues of movie theaters, subject to 5% tax rate schedule of ticket prices, or from external revenues of movie distribution abroad or in free zones, subject to zero% tax rate schedule.

With respect to media production, TV programs, documentary films, TV series and broadcast works, a 5% tax rate schedule is levied against copyrights.

With respect to the distribution of movies abroad, the same manner applicable with the right of marketing and featuring movies abroad is applied herewith.

On his part, Mr. Emad Samy, Head of the Egyptian Tax Authority, highlighted main points stressed in the cooperation protocol

. Most significant, he noted, was the commitment to be shown from media and TV producers to register at the Tax Authority and to have maintained accounts and records in order to guarantee the payment of their dues to the State Public Treasury.

Under the cooperation protocol, two committees shall be formed from the Egyptian Tax Authority, the ECIC and the three said syndicates to settle any disputes arising from the interpretation or the implementation of this protocol, Mr. Samy noted.

In addition, the committee will be charged with investigating any problems, replying to all tax related inquires, raising tax awareness to people dealing with the ECIC and amicably resolving any controversy between the Tax Authority and ECIC members before taking any legal actions.

Mr. Mohamed Abdel Sattar, Deputy Head of the Tax Authority, said that foreign actors shall not be granted work licenses from their respective syndicates unless they submit a copy of their work contract to the Tax Authority and pay their due taxes.

With respect to filing tax returns for members of the three said syndicates, Mr. Abdel Sattar noted that under the Finance Minister's decision issued by amending article 16 of the regulation of VAT Law, members may file their tax return only as per the month of performing professional services instead of filing a tax return on a monthly regular basis, provided that they get prior approval of the Tax Authority and get paid all their dues through the specified month for filing their tax return.