The fatwa and legislation exempts ships transit services in the Suez Canal from value-added tax


The General Assembly of the Fatwa and Legislation Departments concluded that the Suez Canal ships transit services and the navigational services provided to those ships, services exported from inside the country to abroad, are not subject to value-added tax, and concluded that the Suez Canal Authority cleared the amount of 23 billion and 615 million and 294 thousand and 285 pounds to be paid as value-added tax on the services provided.

The fatwa proved that the services that the Egyptian Tax Authority, the Suez Canal Authority, is requesting to be subject to the value added tax in relation to the present dispute, which are limited to (transit fees – towing – guidance – services for renting the authority’s missions and the submersible missions), are provided – according to their nature – within The international waterway of the Suez Canal and does not go beyond it, and since the banks and shores of the lakes through which this canal passes are considered a customs line, then these services have been provided outside the country’s customs lines, and therefore the scope of the aforementioned value-added tax law recedes from its application, With it, the authority’s demand to pay an amount of (23615294285) pounds as the value of the value-added tax on the provision of these services during the period from 2016 to 2018 becomes not based on a valid document of the law.

The reason for issuing the fatwa is that the Tax Research and Policies Sector issued in 2020 a fatwa to the tax center for major financiers regarding the tax treatment of services provided to ships transiting the canal with the knowledge of the Suez Canal Authority, in accordance with the provisions of the Value Added Tax Law, ending in

To that the services provided by the Suez Canal Authority in favor of ships transiting the canal (transit fees – charter services for the authority’s missions and submersible missions) are subject to value-added tax at a category (13%) of the value, as of 2016, in violation of a previously issued fatwa that ended, until Goods and services delivered to high seas vessels operating outside territorial waters, whether foreign or Egyptian, are subject to the general sales tax at a price of (zero) as goods and services exported abroad. Then they were issued with tax differences amounting to (23615294285) pounds, after applying the aforementioned tax category. Addressing the Minister of Finance for not subjecting transit fees and services provided by the Suez Canal Authority for ships in transit to the mentioned tax rate and subject to zero tax as an exported service, which sparked legal questioning.

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