Decree Of Minister Of Finance No.749 Of 2001 On Promulgating The Executive Regulations Of The Sales Tax Law

Transcription

1 The Arab Republic Of Egypt Ministry Of Finance Sales Tax Department Decree Of Minister Of Finance No.749 Of 2001 On Promulgating The Executive Regulations Of The Sales Tax Law Minister Of Finance After taking cognizance of Law No. of 1991 on promulgating Sales Tax Law and Law no. "17" of 2001 on application of the second and third phases of the General Sales Tax, as prescribed in law "11" of 1991; and the decree of the Minister of Finance no.of 1991 on promulgating the Executive Regulations of the General Sales Tax Law, Decided Article (1) The attached Executive Regulations concerning the General Sales Tax shall hereby come into force Article (2) Without prejudice to the provisions of the Sales Tax Law and its Executive Regulations issued by virtue of this decision, applicable ministerial decrees shall hereby continue to be effective. Article (3) The decree of the Minister of Finance No. "161" of 1991, herein before mentioned, shall be repealed. All other provisions contradicting the attached Executive Regulations shall be repealed. Article (4) The present decree shall be published in the Official Gazette and the same shall, as of the date of publication, come into force Issued 20 th on June, 2001 Minister of Finance Medhat Hasanein 1

2 The Executive Regulations Of The Sales Tax Law Chapter (1) Preliminary Provisions Article (1) In application of provisions of the executive regulations, hereinafter mentioned terms and phrases, shall mean the following definitions Law: Sales Tax Law. Table: Each table annexed to Law. Taxable period: One-month period ending on last day of calendar month whereon Registrant filed the "monthly tax return". Trader: Wholesaler and retailer Distribution Agent for taxable person: All and every natural or juridical person bound to work for a taxable person by agency contract for remuneration or commission and assisting such taxable person in distributing goods or services at taxable person's same prices without adding new markup. Said distribution agent shall have same registration number of the taxable person who issues sales invoices, files the return and pays the tax. Chapter (2) Imposition and liability of Tax Article (2) In pursuance of rules, procedures and dates stipulated in the Sales Tax Law, Registrant shall collect and remit the tax to the Sales tax Department. Article (3) In accordance with provisions of Article (2) of the Law, exporter shall, upon exportation of taxable commodities or taxable services, comply with procedures established by Customs and keep documents related to transaction(s), including exportation certificate issued by the competent Customs office or any substitute official certificate issued by Customs.Exportation may be made through a third party, provided that afore-mentioned exportation documents and certificate shall be submitted to the Department within the return period. Article (4) In application of Articles (4), (5) and (6) provisions, following shall be observed: 2

3 1-Taxable persons liable to collect, report amount thereof in the tax return and pay same amount to the Department according to provisions of the law shall be: A- Manufacturers B- Importers. C- Providers of taxable services. D- Distribution agents for taxable persons. E- Traders and the trade agents except traders and the trade agents dealing exclusively in commodities of Table no.1. 2-Without prejudice to credit provisions provided in Article (23) of the Law, tax shall hereby be due on taxable persons and following shall be taxable acts: A- Sale of locally manufactured and/or imported goods by taxable persons aside from tax due at release of such goods from Customs. B- Supply of taxable service by taxable person. 3-Following shall not be deemed private or personal use of commodities: A- Transfer of manufactured commodity among production phases inside and outside factory apart from the tax liability on services of processing for a third party. B- Transfer of manufactured commodities from factories or stores to distribution outlets owned by same registrant in accordance with instructions issued by the Commissioner. Article (5) First In application of provisions of Articles (7) and (8) of the Law, procedures, terms, conditions, guarantees and control systems applicable to customs duty shall come into force in respect of commodities subject to Customs control. The competent authorities shall define the commodities and services essential for carrying out business authorized for projects located in free zones, free cities and free shops. Second Locally manufactured commodities, essentially required for carrying out business authorized for projects located in free zones, free cities and free shops, shall be treated as exports in accordance with applicable provisions in such concern. 3

4 Third In accordance with provisions of the Law, the tax shall be due on taxable commodities and/or taxable services, at customs release thereof, if imported for purpose of local consumption within free zones, free cities and free shops. Importation for purpose of trading within free zones including a whole city shall be deemed local consumption.the tax shall, in case of supplying such commodities outside the free zones, free cities and free shops to the local markets, only be due on the customs duties imposed on such commodities Chapter (3) Calculation of Value Article (6) First In application of provisions of Article (11) of Sales Tax Law, the tax value reported and deemed basis for calculating tax due on taxable commodities and services shall be the amount actually paid in return for such taxable commodities and services listed in tax invoice issued by a registered seller to an independent purchaser, in normal circumstances. The Department may, otherwise, have the right to assess value of taxable commodities and/or taxable services according to the prevailing market price guided by marketing and selling policies of registrant, and by the common price of same commodities of same quality, year of manufacturing, specifications, country of origin and trade mark, among other independent sellers and purchasers, at same time, place and circumstances, as well as whatever justifiable considerations the Department may find indicative. Second Values included in price lists, issued by the Minister in agreement with the competent minister, shall be the tax base for such goods or services therein. Third Tax base of taxable services shall be the total value of services mentioned in the invoice including consideration of services regardless of any other fees or taxes. Fourth The common commercial discounts shall be acceptable in case the sale is by and between a registrant and a purchaser independent therefrom and the tax base shall be the value actually paid. 4

5 Fifth Tax base of goods manufactured in free zones and entered in the local market by a registrant shall be calculated in accordance with the bases adopted for collecting customs duties and as such shall be the value of imported components and customs duties payable thereon and other imposed taxes and charges. Sixth* Taxable value of imported commodities and commodities exempted wholly or partly from customs duty and commodities subject to reduced customs duty shall be the whole value declared in the customs declaration and taken as a basis to calculate customs duty plus customs duty and other taxes and charges imposed on such commodities without prejudice to the reciprocal principles provided for in international conventions. Seventh In case of barter sale, the value of the commodity taken as basis for calculating the tax shall be the value of the commodity sold at the current price in the market. * Amended by virtue of the ministerial decree no. 967 of 2002 issued on 20 / 7 /2002. Chapter (4) Invoices, Returns, Notifications Books and Records Article (7) In application of provisions of Article (14) of the Law, a registrant shall issue a tax invoice at the time of supplying a taxable commodity or providing a taxable service. Such invoice shall be in duplicate (an original and a copy). Said original shall be given to the purchaser while the copy shall be kept the registrant. Such invoices shall be serialized by date of issuance thereof. A tax invoice shall, hereby, include the following details: - A- A serial number and issuance date of the invoice. B- Name, address and registration number of the registrant. C-Name, address and registration number of the purchaser if registered or known. D- Details of commodity sold or service rendered, value thereof, the applicable tax rate, and the invoice total value. The invoice details shall be continually and regularly recorded in books and records prepared by the registrant for that purpose. The Commissioner may amend the said details and may issue tax invoice forms consistent with the nature of specific activities of registrants. 5

6 The Commissioner may set simplified rules -including non-issuance of tax invoices except upon request of purchaser - for calculating tax due by retailers who can not issue a tax invoice for each sale. Production cooperative societies and productive family cooperatives purchasing production requirements from craftsmen, workshop owners, small plants and registered productive families and selling the same to registered members thereof may issue a statement, accompanying the selling invoice to the member, that such production requirements were purchased from registered manufacturers or registered importers, and tax thereon was paid. Said statement shall also include tax amount and tax rate recorded in tax invoice. Such statement be given to the afore-mentioned members and shall be deemed a document for allowing tax credit stipulated in Article (23) of Law. Article (8) In application of provisions of article (15) of the Law, a registrant shall keep the books and records stipulated in Law no. (17) of 1999 on promulgating the "trade law" as well as the following accounting books and records in which the registrant shall continually and regularly enter details of transactions: 1. Purchases book: including details of purchase invoices and/or details of certificates of customs procedures; 2. Sales book:including details of tax invoices issued for the registrant's sales of goods and/or services; 3. Book of returned goods: including details of invoices concerning returned sales and/or purchases as recorded in credit and debit notices; 4. Book of exportation: including details of exported consignments such as serial number of customs certificate of exportation, date of exportation, exportation port and destination country; 5. Store record: including up-to-date details of movement of the stock in hand; 6. Original journal book: for the registrant whose invested capital exceeds L.E ; 7. Stock book: for the registrant whose invested capital exceeds L.E ; 8. Sales tax summary book: including the total values of transactions and dealings related to the tax (referring to the number of each book or record from which such totals are driven). Such summary book shall include the following details: - A-Total values of sales and purchases excluding the tax. B- Total amounts of Sales Tax charged on sales of the registrant including personal and private use supplies and other disposals during each individual tax period. C-Total amounts of Tax charged on deductible purchases (inputs). D-Value of settlements as recorded in credit and debit notes. E-Tax payable by the registrant for each tax period after calculating tax credit. In case the registrant uses a computer system, the available data and files may be considered as an alternative for the afore-mentioned books and records. As for the retailer using one of the retail schemes, he/she shall keep the following books: 6

7 A- Purchases book. B- Daily gross takings (sales book). C- Sales tax summary book. The commissioner may, with regard to certain registrants, determine certain simplified books, records and invoices consistent with the nature of activities of such registrants. Article (9) Without prejudice to the first paragraph of the previous article, each and every registrant manufacturing a commodity listed in Table no." 1 " of the law shall keep the following books and records: 1. A book to record the raw materials used in manufacturing taxable commodities. 2. A book to record the details of the manufactured commodities and transactions made by the registrant. Article(10) In pages of all records and books mentioned in articles (8) and (9), no space shall be left blank and no writing in margins shall be allowed. Till rolls shall be admitted on calculating tax amounts in case the registrant uses cash register and the commissioner shall issue the rules and procedures guaranteeing the organization, control and verification of the above-mentioned till rolls. The registrant shall keep books, records, invoice copies and documents including the data of till rolls for three fiscal years following the year in which the data were recorded. Article(11) In application of the provisions of article "16" of the law, each and every registrant shall, within two months succeeding the end of each taxable period, file a monthly return on form no. (10) on tax due on his/her sales of taxable goods and taxable services to competent district offices. Such return shall, in accordance with article "32" of the law, be accompanied with tax payments. Tax return of April shall be filed accompanied with tax payments on a date not exceeding the fifteenth of June. The registrant shall complete the details mentioned in the statement of purchases enclosed with the tax return, i.e. the invoice number and date, the value of the invoice, the deductible and undeductible sales tax paid, the name of the seller, his/her registration number and the kind of the commodity or service. The registrant shall,as to commodities of Table no. (1) attached to the law, file a tax return on form no. (100 G.S.T) accompanied with tax payment within the month following the end of each taxable period. The registrant shall file said return, even if not making any taxable sales of goods and services during the taxable month. 7

8 If deadline of filing the return and paying the tax is an official holiday, the first subsequent working day shall be the complementary day of such period. As to certain importers who usually import one or two times a year, the Commissioner may, without need for filing monthly return by registrant, accept submission of return concerning the month of import, if importation is made in the same month of selling. Chapter(5) Registration Article(12) In application of provisions of Article (18) and paragraph (6) of Article "47"of Law, each and every: - A- Manufacturer or service provider whose annual turnover reached or exceeded registration threshold; B- Importer regardless of turnover; C- Producer of commodities of Table (1) regardless of turnover; D-Registered distribution agent regardless of turnover; E- Trader or trader agent who reached or exceeded the registration threshold; Shall,within a period determined by a ministerial decree, submit an application to the Department in order to register his/her name and details on form no. (1 G.S.T) attached hereto therefor. Each and every taxable person, whose turnover reached or exceeded the registration threshold within any fiscal year or part thereof after the enactment of the Law, shall, within the month in which his/her sales of goods and services reached or exceeded the registration threshold, apply to the Department for registration. In all cases,registration provisions shall not apply on producers or importers whose activities are restricted to exempted commodities; as well as traders dealing in exempted goods or in Table no. (1) commodities. Details and information submitted by productive cooperatives or charitable societies on value of sales of members thereof or on value of sales of productive families affiliated to such entities shall, in case of reaching the registration threshold, be admitted. Each and every productive family, if reached the registration threshold, shall be deemed an independent taxable manufacturer and shall be subject to the provisions of the law. For registering taxable persons, the following rules and procedures shall be followed: 1. A registration application shall be submitted to the competent District office to which the Headquarters of the taxable person's business geographically belongs. 8

9 2. The District office shall review the registration application to ensure the completion of the information required. If the application information were incomplete, the District shall initially register the applicant and notify him/her on form no. (2 G.S.T) for completion of the registration application details within the period specified in the above-mentioned application. Completed registration application shall be entered in the record prepared therefor in the District Office. 3. The Department shall specify a registration number for the registrant, issue a registration certificate thereto on form no. (3 G.S.T) and notify such registrant on form (4 G.S.T) of such certificate to be located in a visible place in the business of same registrant. Article(13) In application of the provisions of Article (19) of the Law, any natural or juridical person, whose total value of sales of taxable and exempted commodities or of taxable services does not exceed the registration threshold, may submit an application to register his/her name and details on form no. (1 G.S.T) attached hereto. In case of registration, said person shall be deemed to be subject to the provisions of the Law and shall follow the procedures and rules stipulated in article (12) above. Article(14) 1. The registration certificate provided for in Article (20) of the Law shall be issued on form no. (3 G.S.T) attached hereto. Such certificate shall be ratified by the Commissioner or his authorized representative, shall bear the seal of the state and shall be sent to the registrant attached with form no. (4 G.S.T) "notification of "registration" The registrant shall place such certificate in a visible place in his/her headquarters, whereas other copies of such certificate shall be placed in visible places of the registrant branches to be under clients' sight. 2. The registrant shall, in case of loss or damage of said certificate, apply for an official copy instead of the certificate lost or damaged on form no. (7 G.S.T)prepared therefor in accordance with rules and instructions issued by the Commissioner. Article(15) In application of the provisions of Article (21) of the Law, each and every natural or juridical person, whether registered or required to be registered shall, within 21 days, notify the Department of any changes occurred in information of the registration application as to name, address, nature of main taxable activity or other activities. A new registration certificate in same number and of updated information shall be issued provided that the previous certificate is returned to the Department. 9

10 Article(16) In application of Articles (9) and (22) of the Law, the following shall be observed: 1-The Commissioner or his authorized representative, may cancel the registration of any registered person who loses one of the registration conditions required by Law as of the last day of the taxable period wherein cancellation decision is issued. The Commissioner, or his authorized representative, may, on his own initiative for any reason he finds justifiable or upon request of a registrant, cancel the registration of such registrant according to the provisions of Article (19) of the Law. The Department shall notify the registrant of date of deregistration thereof by a letter with return receipt. 2-Any registrant entirely ceases practicing taxable activities or liquidates such activities shall, within a period not exceeding one month as of date of cease or liquidation of activities, notify the Department thereof. The Commissioner, or his authorized representative, shall cancel registration of such registrant as of the last day of the tax period wherein taxable activity is ceased. 3-The registrant shall send the cease notification afore-mentioned in previous paragraph to the Commissioner, or his authorized representative, by a letter with return receipt. Said notification shall include date of cease of activity and whether the registrant intends to recommence practicing the taxable activity during one year or not. The registrant shall keep the notification of deregistration, form (5 G.S.T), as well as all books, records and tax invoice copies for three years as of the of deregistration. 4-In case of deregistration because value of sales of registrant is less than the registration threshold or the registrant ceases his/her activity, Tax shall be due on goods in his/her possession at the date of deregistration. 5-In all cases, the registrant shall not be notified of deregistration until registration certificate and copies thereof, form no. (3 G.S.T) are returned back to the Department. Chapter(6) Deduction,Exemption and Refund of Tax Article(17) In application of Article (23) of the Law, registrant may, within the tax period, deduct from the total tax due on the value of his/her sales of taxable commodities the tax previously charged on the following: 10

11 First:Returned sales in pursuance of the following terms and conditions: 1. Deduction shall only be applicable to tax previously paid on returned goods. 2. Returned goods has actually been received at the same state at which such goods were sold, details thereof has been entered in regular books and records of the registrant and value of such goods was repaid to the purchaser or suspended to the purchaser's account in the registrant books. 3. The registrant shall issue a dated and serialized debit /credit note including details of both seller and purchaser. Second:Inputs and purchases for resale: Input tax incurred on inputs and purchases for resale and deductible by registrant from aggregate amount of tax due on taxable sales of such registrant during a tax period, provided that such registrant keeps tax invoices of such inputs and purchases, shall be: - 1. Tax previously paid on inputs of locally manufactured commodities and purchases for resale if all sales of such registrant during such tax period are taxable. 2. Tax previously paid on imported commodities during such tax period in accordance with the details of certificate of customs procedures. 3. In case tax previously charged on inputs and purchases for resale exceeds tax due on sales during the accounting month, tax due on sales shall be monthly deducted from tax previously paid on inputs until exhausting such tax. 4. In case a part but not the whole of the registrant sales (outputs) during a tax period is subject to the tax, deduction shall be as follows: A- the aggregate amount of tax due on inputs only used in manufacturing taxable outputs, whether manufacture occurred during the tax period or afterwards, shall be deducted. B- the tax due on inputs used in manufacture of exempted outputs, whether manufacture occurred during the tax period or afterwards, shall not be deducted. C- tax due on inputs used in manufacture of partially exempted outputs (items A and B) shall be deducted according to the proportion of taxable outputs to total outputs. D- the seller shall issue a debit note for the tax amounts due on inputs of commodities exempted in items (B and C) if such tax amounts were deducted in previous returns. E- the above said rules shall apply to tax previously charged on goods sold by the registrant in each phase of distribution phases. Third: Value Adjustment: In case an adjustment of a tax-paid transaction between two registrants resulted in an excess or reduction in value thereof after filing return, the following shall be observed: 11

12 1. if transaction value is adjusted by excess, both seller and purchaser shall record such adjustment in the returns submitted by each during the month following such event as follows: A- the seller shall, in his/her return, add the excess of the tax amount to tax due to the Department by issuing a debit note. B- the purchaser may deduct such excess from tax due on his/her sales as input tax. 2. If transaction value is adjusted by reduction, both seller and purchaser shall record such adjustment in the returns submitted by each during the month following such event as follows: A- the seller may, in his/her return, deduct such tax from tax due on his/her sales. B- The purchaser shall, in his/her return, add the amount of such reduction to the tax due to the Department by issuing a debit note. As to the rules afore-mentioned in paragraphs First, Second and Third of this Article, the following conditions shall be met: 1. In case of returned goods, such goods had to be actually received and details thereof had to be entered in books and records. 2. The purchaser shall keep a written document to prove that reduction of price had actually been made. 3. Debit and credit notes shall include address and registration number of seller and name and address of purchaser as well as number and date of the original tax invoice, all necessary details regarding increase or reduction in price, amount of such increase or reduction and a separate statement of tax amount added or reduced. 4. Debit and credit notes shall be dated and bear a serial number. 5. The percentage of tax deducted to the total tax deducted on purchases shall be the same percentage of tax charged on commodities in proportion to the value of such commodities. Forth: Subject to the provisions of Articles (3) and (19) hereof, in case amount of tax due to the registrant, as a result of exportation, exceeds tax charged on his/her sales within a tax period, the registrant may, upon the fulfillment of conditions mentioned in Article "3" hereof, claim from the Department the discrepancy between his/her dues of tax on purchases or inputs of exported commodities and tax charged on his/her sales during such period wherein the monthly return is submitted. A registrant, whose activity is restricted to exportation may, claim from the Department the refund of the tax previously charged on his/her purchases and inputs of his/her products within the limits of each return and in compliance with the procedures stipulated herein. 12

13 The Department shall, within three months as of the date of submitting the claim, refund the afore-mentioned discrepancies. Article (17 bis)* In application of the provisions of article (23 bis) of the law, a registrant may,on calculation of tax,deduct from the tax due on his / her sales of taxable goods and services the tax previously incurred on the machines and equipment and parts thereof and spare parts used in performing taxable services or manufacturing taxable goods including commodities of table (1) attached to the law in accordance with the following terms and conditions: 1- The tax previously incurred on motor vehicles for transport of persons and motor cars shall not be deducted unless such vehicles and cars are used for carrying out the licensed activity of the business. 2- In case the tax previously incurred on such machines, equipment and parts thereof exceeds the tax due on the sales during the taxable month, credit shall be made within the amounts of tax due. The amounts that are not deducted shall be carried forward to the following taxable period(s) until exhausting such amount in full. 3- The tax previously incurred on the machines, equipment and parts thereof used in manufacturing an exempted commodity or performing a non-taxable service shall not be deducted. 4- The tax previously incurred on the machines, equipment and parts thereof used in producing partly taxable (including zero rated exports) and partly exempted or nontaxable outputs shall be deducted according to the proportion of taxable outputs to the total outputs. 5-The Commissioner or his/her representative may temporarily release machines and equipment imported by factories manufacturing exempted goods and required for carrying out the licensed activity of the business in accordance with terms of payment and within the limits and in agreement with the rules and guarantees specified by a ministerial decree. 6- The commissioner or his / her representative may temporarily release machines and equipment imported by businesses under construction and required for being used in manufacturing taxable goods or performing taxable services in accordance with terms of payment and within the limits and in agreement with the rules and guarantees specified by a ministerial decree. Tax incurred on such machines and equipment shall not be deducted from the tax due on the sales of the business till the full amount of tax due is paid. In all cases machines and equipments prescribed in items ( 5 ) and ( 6 ) of this article shall not be finally released till the full amount of tax due is paid. * Added 0n by ministrial decree No. 295 of

14 Article(18) Commodities and services enumerated in Tables no. (1) and (2) attached to the Law shall not be subjected to the afore-mentioned deduction provisions whether such commodities and services are taxable final products or are inputs of other taxable commodities and services. Article(19) In application of the provisions of item (1) of Article (31) of the Law, tax paid on exported commodities, whether final or entered in manufacturing other commodities, shall, within three months as of date of submitting a claim, be refunded in accordance with the following conditions: 1. Such commodities shall have been purchased from a registrant and the purchaser maintains a tax invoice. 2. Such commodities shall not be secondhand goods. 3. Such commodities shall have been exported under the control of the Customs. 4. Claimant of refund shall attach exportation documents and tax invoice to the claim and shall keep a record of details of exported commodities, number of exportation certificate and date of exportation. The Customs may, in agreement with the Department and in accordance with customs procedures of exportation, refund tax on exported commodities and tax on imports re-exported, whether as final products or as inputs of locally manufactured exports. A traveler departing the country shall have the right to refund the tax previously paid to a registered seller on taxable purchases of a value of not less than L.E. 1000, provided that the said purchases are exported with the traveler within three months as of the date of purchase. Tax shall be refunded through the bank located at the Customs outlet or by a check issued by Tax Refund Office at the Department to be sent at the address of such traveler after deducting 5% of the total refund amount as administrative expenses. The traveler shall have the above said refund upon submitting the following documents: -A copy of his/her passport. - The tax invoice. - Form 124 "G.S.T". The Commissioner may set any rules or procedures necessary for refunding tax on such commodities. In all cases, only tax previously collected on goods exported shall be refunded, at the same rate and value applicable at time of payment. Refund of tax previously collected on goods exported under the control of Customs shall be set off from the Sales Tax Department account. 14

15 Article(20) In application of item (2) of Article (31) of the Law, tax collected by error shall be refunded provided that the person concerned shall submit a claim showing the amount collected by error and reason of such error and the tax period in which the error is made and shall attach the supporting documents to the claim. Such tax collected by error shall be refunded within a period of three months as of submitting such application. Article(21) In application of the provision of Article (25) of the said Law, exemption beneficiary shall submit a written declaration wherein he/she commit himself/herself not to dispose of exempted commodities, except for purposes of exemption within the five years following the date of exemption, except after notifying the Department and paying Tax due in accordance with conditions of commodities and value thereof and applicable tax rate on the date of payment, unless otherwise provided for in reciprocity rules. Hereinafter mentioned rules shall be applied: 1. Exemption beneficiary shall notify the Department of his/her desire to dispose of or to change the purpose of usage prior to commencing such disposal. 2. The beneficiary shall inform the Department of the approval of the Foreign Ministry on such disposal and that principle of reciprocity does not stipulate otherwise. 3. The Department shall examine such commodities to determine the value thereof in accordance with status thereof and the applicable tax rate and amount of due tax at the time of payment, and the Department may seek assistance from the Customs experts in such concern. 4. The Department shall issue a note discharging the applicant after payment of tax and any other amounts that may be due. Article(22) In application of the provisions of Article "27" of the Law, the provisions stipulated in the decree of Minister of Finance no. (193) of 1986 promulgating the Executive Regulations of Law no."186" of 1986 on customs exemptions of imported commodities shall be applied. The domestic commodities specified in the afore-mentioned article of the Law shall be exempted from tax within the following limits and terms and conditions: - 1. Samples consumed for purposes of analysis in government laboratories on condition that a relevant certificate issued by a governmental laboratory, proving that such samples are analyzed and used, shall be submitted. 2. Non-commercial personal belongings shall be exempted on condition that the person concerned shall submit an application to the Department for exemption thereof attached with a proof that such belongings are deemed personal and with a commitment not to dispose of such belongings to others within the period stipulated in the Law as well as a 15

16 proof that the owner has acquired such belongings from a recognized sports or scientific or religious competition. 3. The value of exempted personal belongings of travelers coming from abroad, whether local or imported and whether brought from abroad or from duty free shops or free zones, shall be the same value for customs exemption stipulated in accordance with the provisions of the Customs Law. Article(23) In application of the provisions of Article " 29" of the Law, the following shall be observed: First: requisites of the Ministry of Defense: 1. Exempted commodities and services shall be determined by a certificate from the Ministry of Defense ratified by Chief of Financial Affairs Department of Armed Forces or any person so authorized stating that said commodities and services are deemed essential for purposes of armament. 2. Provisions of this Article shall apply to all commanders of troops and to bodies and authorities and agencies of the Armed Forces and Funds of the Ministry of Defense or affiliated thereto. 3. Said commodities and services shall be funded and purchased from the budget of the Ministry of Defense or from the resources thereof. 4. Financial Affairs Department of the Armed Forces shall, with regards to the regulation of such exemption provisions, be the sole body to deal with the Sales Tax Department. 5. Financial Affairs Department of the Armed Forces shall, in case of purchasing, importing or selling any commodity or supplying any services which is not to be exempted, forthwith notify the Sales Tax Department in order to take measures of collecting due tax. 6. The Commissioner shall, in agreement with the Chief of the Financial Affairs Department of the Armed Forces, issue a decree to constitute an ad hoc committee from Sales Tax Department officers and the Financial Affairs Department of the Armed Forces staff to follow up executive procedures concerning such exemption. 7. For applying the said exemptions, the following procedures shall be applied: - A- The Ministry of Defense shall issue a certificate ratified by the chief of the Financial Affairs Department of the Armed Forces or any person so authorized to be introduced to any registrant as the case may be, affirming that such requisites to be procured to the Armed Forces are supplied for the purposes of armament. Such certificate shall be accompanied with the written approval of the Department on such exemption. B- Registrant shall supply to the Ministry of Defense goods and services not charged with tax and shall issue tax invoice showing that such supplies are to the Ministry of Defense and are exempted in pursuance of Article "29" of the Law and shall enter same invoice data in the books thereof. C- Competent exemption units of the Ministry of Defense shall, in books of such units, enter the data of tax invoices issued by registrants. 16

17 8. The Chief of the Financial Affairs Department of the Armed Forces shall notify the Commissioner of the name of the person authorized to issue said certificate and of the signature of same person. Second: Requisites of Other Entities: 1. The provisions of Article " 29 " of the Law shall be applicable to requisites essential for the purpose of armament for defense and national security required to the following entities: - A- Companies, units and bodies of the Ministry of Military production. B- The Ministry of Interior. C- Arab Organization for Industrialization. D- The Agency of National Security. 2. The competent ministry or his representative or the chief of the competent body or his delegate shall issue a certificate affirming that such requisites are essential for purposes of armament for defense and national security provided that the Commissioner shall be notified of the name of person so authorized and the signature thereof. 3. The provisions and procedures stipulated in items 3,5,6,7 and 8 of paragraph "First" of this Article shall apply to such bodies each in competence thereof. 4. Entities herein afore-mentioned shall pay Tax due on all commodities thereof purchased for the purposes other than those stipulated in this Article, and shall pay tax due on all commodities sold to bodies not exempted from tax. Chapter (7) Tax Collection Article (24) The registrant shall pay tax due on each taxable period with the monthly return thereof to the competent local Sales Tax district office within 2 months following the end of the tax period. The return of April accompanied with tax shall be filed on a date not later than the 15 th of June. As to Table (1) commodities, tax shall be paid within the month following the end of tax period. The Commissioner may specify the entity to receive monthly returns, tax due and method of payment. The Minister, whenever necessary, may, by a decree, extend the period of filing the return in accordance with Article "16" of the Law. 17

18 The Commissioner may, by a decree define procedures of tax collection in conformity with nature of certain commodities. Tax due on imported commodities shall be paid at release from competent Customs Office and at the time of payment of customs duties and in accordance with customs procedures applied thereto. Such commodities shall not be finally released from the customs outlets before payment of full due tax. The Commissioner may temporarily release production machines and equipment supplied to factories and essential for production processes in pursuance of terms and conditions of payment as well as limits and rules and guarantees specified by a decree of the Commissioner. Such commodities shall not be finally released before payment of full due tax. The Commissioner may specify guarantees suitable for proper amount of tax due on goods, temporarily imported and released upon payment of export duty, to be exported under any of the special customs schemes. Article(25) Additional tax shall be due at a rate of half percent (0.5%) of the amount of defaulted tax for each week or part thereof following the due date of payment specified in the previous article. In case tax is not paid in due dates, the Department may take measures of administrative seizure to collect the tax and the additional tax and any other dues. Article(26) In application of the provisions of Article (33) of the Law, taxable services shall be deemed of a continuous nature if rendered regularly and continuously in order to meet the needs of the beneficiaries thereof and if the value of such services is collected by invoices issued at dates scheduled by services suppliers. Services of continuous nature shall be identified by a decree of the Minister in each case individually. Chapter (7 bis)* Reconciliation Article (26 bis) In application of the provisions of article (35) of the law, the following rules shall be observed: 1- Reconciliation committees shall, upon request of a registrant or his/ her representative, be competent to consider the aspects of dispute arises between a registrant and the Department concerning value, kind,quantity of good(s) or service(s) or amount of tax due thereon or whether such items are taxable or not. 2- A registrant may apply for referring the dispute to the reconciliation committees within sixty days as from the date of rejection of his / her appeal or non-decision thereon. The application shall include the name of the registrant and the question in dispute as well as requests of the registrant accompanied by the supporting documents. 18

19 3- The commissioner or his / her representative shall, within the fifteen days following the date of notification thereof of referring the dispute to the reconciliation committee,approve the application of the registrant and refer the dispute, as a preliminary stage, to the committee in a minutes written in duplicate and signed by the registrant. A copy of the minutes shall be submitted to the registrant and shall be attached with all necessary documents. A dispute shall not be considered by reconciliation committees unless attached within a proof of payment of tax according to the monthly return provided for in article (16) of the general sales tax law and payment of an amount of L.E.500 for referring the dispute to reconciliation committee. Article (26 bis "1") A dispute shall be considered as follows: First: the reconciliation committees:- A committee or two shall be formed, in regional offices, of two members, one thereof shall be appointed by the Commissioner or his / her representative. Such member shall not have considered the dispute in any stage thereof. The other member shall be appointed by a registrant or his / her legal representative. The head of the district office shall be notified of the name of the other member within fifteen days as from the date of issuance of the minutes referred to in item ( 3 ) of this article, by a registered letter with a return receipt or by a written notice submitted in the local district office for a receipt. In case of failure due to non- appointment of a representative on the part of a registrant or in case of disagreement of the two members, the dispute shall be referred to the committees of appeals. Second: committees of appeals: A committee or two shall be formed in each district office as follows: - A permanent delegate appointed by the minister as a head of a committee, other than the Department employees, for a renewable year. - A member representing the Department appointed by the Commissioner thereof, such member shall not have considered the dispute in any previous stages thereof. - The registrant or representative thereof. The committee may, as convenient, ask for the assistance of experts and technical advisers. Such experts and advisors shall not have any votes for or against the committee's decision. Article (26 bis "2") The number, geographical locations and area of competence of the reconciliation committees and committees of appeals shall be defined by a ministerial decree according to the Commissioner's suggestion.the Commissioner shall issue a decree on the formation of technical secretariat for each one or more of the reconciliation or appeals committees. Technical secretariat shall be formed of the Department's employees. 19

20 Technical secretariats shall, after collecting remuneration expenses for reconciliation committees herein before referred to, submit a copy of the minutes and the attached documents to the head of the district office concerned to assign the committee to be charged with consideration of dispute referred to reconciliation committees as well as the time and place of meeting thereof. Article ( 26 bis " 3 " ) Reconciliation committees shall consider the disputes referred thereto in accordance with the following procedures:- 1- The technical secretariat of the commission shall notify the Department's representatives as and registrant concerned of the time and place of the meeting as well as any adjustments that may occur later by a registered letter with a return receipt or by a written notice signed by each representative. 2- The committee shall hold meetings in the location assigned for such purpose. All documents and instruments shall be under the disposal thereof. Both members shall examine the dispute. 3-As to any new documents or points of view that have not been previously stated in the minutes or attached thereto and the registrant's representative or his / her delegate deems it convenient to present such documents and points of view to the reconciliation committee, the same shall be submitted to the technical secretariat concerned sufficiently before being considered by the committee. 4- The two members of the committee shall state the viewpoints thereof and each shall sign under the same. 5- In case of agreement of the two members, the decision thereof shall be final. The technical secretariat shall notify both the head of the district office, the head of the regional office and the registrant or his / her legal representative of such decision. In case of non-agreement of the two members, their non agreement shall be recorded in the minutes. The documents shall immediately be sent attached with the minutes to the technical secretariat of the committee of appeals in the regional office. Article ( 26 bis " 4 " ) Committee of appeals shall consider the disputes referred thereto from reconciliation committees in accordance with the following procedures: 1- The technical secretariat of appeals committee of appeals shall, immediately after referring the documents of the dispute thereto from the technical secretariat of reconciliation committee, present the said documents to the competent head of regional office to specify the committee to consider the appeal and place and date of meeting thereof. 2- The technical secretariat of the committee shall notify the members of the committee of appeals and the two members of the reconciliation committee of the date and place of meeting at least a week before holding thereof by a registered letter with a return receipt. 3- The committee shall hold the meeting thereof in the place and on the date previously set therefore and all documents and instruments referred thereto shall be at the disposal thereof. The decision of the committee shall be issued by majority of votes and shall be stated along with the reasons thereof in the minutes as well as the party to incur the costs of 20

21 referring the dispute to the committees in case the decision thereof is not in favor of the registrant. 4- The decision of the committee shall be effective and the technical secretariat of the committee shall notify the head of the district office, the head of the regional office and the registrant or his / her legal representative of the said decision by a registered letter with a return receipt. 5- I n case the decision of the committee of appeals is not in favor of the registrant, the tax discrepancy between the amount paid by the registrant according to the return thereof and the amount due according to the decision of the committee of appeals as well as the additional tax on such discrepancy during the period from date of payment according to the tax return and date of payment according to the decision of the committee shall be due by the registrant. Article (26 bis "5") In case a decision is issued in favor of a registrant, the committees' expenses shall be incurred by such registrant Reconciliation committees and committees of appeals may not express viewpoints to be considered as general rules. The decisions thereof shall not be binding except as to the special cases the same had been issued on. Remunerations of the permanent delegate of the committee of appeals shall be defined as L.E. 300 for each case. Remunerations to the Department's representatives in both the committee of reconciliation and the committee of appeals shall be defined as L.E.100 for each case. Remunerations of whoever asked for assistance including experts and technical advisors in each case separately shall be decided by the Commissioner according to a suggestion by the permanent delegate. Article (26 bis "6") The provisions of law no. 7 of 2000 on the formation of the committees of reconciliation on disputes which ministries and general judicial persons may be part thereof shall not apply to the disputes of the general sales tax. * Added 0n by ministrial decree No. 295 of Chapter(8) Control Article(27) In application of the provisions Article (40) of the Law, tax control shall be based upon documents and books. In case of computer system application, the Department may review and check such systems. In absence of such documents and books, the Commissioner may set 21

22 necessary control rules and procedures. the Commissioner may, in certain cases and for special consideration regarding nature of commodities, set control procedure systems therefor. Subject to the previous paragraph and for purposes of Table no. (1) commodities attached to the Law, the following shall be applied: First: 1-Pure alcohol shall not be denatured to be used as fuel or for industrial purposes except in alcohol production plants or in customs zones in case alcohol was imported. In all cases, alcohol denaturing shall take place in the presence of a committee of the Department staff constituted by a decision of the competent general manger. In case alcohol denaturing takes place according to special industrial system for industrial purposes, approval of the Industrial Monitoring Authority shall be taken for each case individually. 2- Upon completion of alcohol denaturing for use as fuel or for industrial purposes, a triple sample of the product and other materials used in denaturing shall be taken, containers thereof shall be sealed and quantity thereof shall not be released except after proving that alcohol was sufficiently denatured according to analysis reports. 3- Owners of plants and laboratories entitled to obtain denatured alcohol for industrial purposes shall keep books and records showing the quantity acquired and disposal thereof.such books and records shall be under the control of the Department. 4- Denatured alcohol for industrial purposes shall be alcohol denatured for use in one of the basic industries specified by a decree issued by the Commissioner in agreement with the Chairman of the Industrial Monitoring Authority. After defining the materials used and denaturing percentages in each case. Second: 1- Plants and laboratories producing fresh grape wine and grape juice fermentation thereof arrested by adding alcohol and producing alcoholic beverages shall keep records for entry of different stage of manufacturing (fermentation, distillation, refinement, denaturing, dilution and bottling) and shall notify the Department at least 24 hours before each operation to assign an officer for control purposes including sealing the apparatus and tools. The registrant shall, on completion of distillation and fermentation (of wines), fix a date for bottling and till then quantities produced shall be under the direct control of the Department. The Department officer shall fix banderole and write down a minute including bottled quantities and amount of tax due and necessary commitment of payment by the registrant. All procedures in such minute shall be undersigned by both the Department officer and the registrant or his/her legal representative. 22