VAT Recovery And Input Tax Allocation In Egypt

Value Added Tax (VAT) recovery is an important consideration for businesses operating in Egypt, particularly those engaged in both taxable and exempt activities. While the Egyptian VAT system generally allows registered businesses to recover input VAT incurred in connection with taxable supplies, recovery becomes more complex when expenses relate to both categories of activity. Under VAT Law No. 67 of 2016 and its Executive Regulations, as amended, businesses must identify expenses directly attributable to taxable activities, distinguish those related to exempt activities, and allocate input VAT incurred on shared costs

Understanding Mixed Taxable and Exempt Activities

Mixed activities arise when a business generates revenue from supplies subject to VAT alongside supplies exempt under Egyptian legislation. This distinction directly affects the entitlement to recover input VAT. VAT incurred in connection with taxable supplies may generally be deducted if the statutory requirements