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| Eng. Mamdouh El-Morshedy |
Cairo, July 19, 2025 – Eng. Mamdouh El-Morshedy, Head of the Tax Committee at the Egyptian Federation for Construction and Building Contractors, warned against applying the newly approved 14% value-added tax (VAT) on ongoing construction projects, stressing that it should only be applied to upcoming projects.
El-Morshedy explained that the Egyptian Parliament has recently approved amendments to the VAT law, raising the tax on construction works from 5% to 14%, and integrating it into the general VAT system.
In a recent meeting between the Federation—headed by Eng. Mohamed Sami Saad—and Ms. Rasha Abdel Aal, Head of the Egyptian Tax Authority, the Union presented its concerns regarding the new law, particularly the potential burden it could impose on contractors.
“The law should have been preceded by broader social dialogue and discussions around its economic impact—especially the penalties imposed on contractors and the unfair obligation to transfer the tax from project owners to the Ministry of Finance,” El-Morshedy said.
He noted that applying the new tax to ongoing projects would create serious complications, such as issues with subcontractors and stockpiled materials (inventory), adding that this could jeopardize the financial stability of many companies.
El-Morshedy emphasized that the tax is technically paid by the service recipient, while contractors are merely responsible for transferring it to the government. This, he said, makes it even more important to avoid retroactive application on projects already in progress.
During the meeting, Eng. Mohamed Sami Saad requested that the new VAT be applied only to future projects, and that this be clearly stated in the law’s executive regulations.
El-Morshedy also revealed that the Federation has formed a dedicated committee to monitor developments and assess the impact of the law on a continuous basis.