The ruling, issued by the tax authority's research and studies departments, aims to end public debate over the issue, Saad said. He noted that service charges, as per a 2003 ministerial decree, are only applicable to hotels and tourist establishments and are regulated by the Ministry of Tourism.
The Egyptian Tax Authority affirmed that while restaurants
with a tourism license are subject to the standard 14% VAT, non-touristic
restaurants are only subject to VAT if they meet specific criteria outlined in
Law No. 67 of 2016 and subsequent ministerial decrees.
These criteria include:
Restaurants and cafes located inside malls, residential
compounds, tourist sites, or airports,
Establishments belonging to commercial chains or using a
well-known local or international brand name,
Restaurants that offer services through electronic apps or
websites,
Establishments that provide meals or services with
tourist-grade specifications or impose a service charge.
The tax authority stated that these categories must collect
and remit VAT to the state, and failure to comply is a direct violation of the
law that is subject to legal action.
Conversely, restaurants that do not meet these conditions are exempt from VAT, as per Article 16 of the exemptions list in Law No. 67 of 2016. This article specifies that food and beverages prepared and sold directly to final consumers by non-touristic restaurants are exempt, with the exception of those that meet the criteria specified by the finance minister's decrees.