Egypt has finally clarified what it means to export a service, and multinational tech companies are paying attention. After years of regulatory ambiguity that left service exporters trapped between contradictory tax interpretations, Cairo has issued comprehensive guidance exempting exported services from its 14 per cent value-added tax — a move that arrives with impeccable timing as the country courts an unprecedented wave of offshore tech investment.

The Egyptian Tax Authority’s new framework, outlined in Executive Instructions №45 of 2025, establishes clear rules for applying zero-rated VAT to services provided by Egyptian-based suppliers to clients abroad. It’s less a bold new initiative than a long-overdue admission that the existing VAT Act, in force since 2016, needed an instruction manual that actual humans could follow.

“We were guided by international standards and practices,” Rasha Abdel Aal, head of the Tax Authority, told reporters. What she didn’t say: those international standards have been available for nearly a decade, during which Egyptian service exporters operated in a fog of contradictory rulings from local tax offices.

The Zero-Rate Revelation

Under the new rules, Egyptian firms providing services remotely to non-resident clients can now apply zero-rate VAT and recover input taxes — provided neither party requires physical presence for service delivery. For Egypt’s burgeoning tech services sector, this represents a significant competitive advantage, at least on paper.

The clarification comes as Cairo recently signed 55 agreements with technology giants including Accenture, Capgemachi, Deloitte, Luxoft, and Vodafone’s shared services arm, committing to create more than 70,000 high-value jobs over three years. Egypt’s digital export revenues have doubled from $2.4 billion in 2022 to $4.8 billion in 2025, according to government figures, whilst the number of offshoring operations has grown from 90 to over 240 in the same period.

The tax reforms couldn’t be better timed — or more necessary. Multinationals expanding operations in Egypt can now promise clients they won’t be passing along Egyptian VAT on top of whatever local taxes apply in destination markets. For web developers, software engineers, and digital consultants, it’s the difference between competitive pricing and explaining why an invoice includes mysterious Egyptian surcharges.

But the fine print, as always, rewards close reading.

What Qualifies (and What Doesn’t)

Services related to immovable property remain taxable at the standard rate, even when clients reside abroad. The Tax Authority’s logic: if the asset being serviced sits in Egypt, so does the tax liability. Real estate consultants advising foreign investors on Cairo properties will find no relief here.

After-sales services — maintenance contracts, spare parts supply — are similarly excluded, the regulations reasoning that physical goods or presence violate the “remote provision” principle. That creates an odd asymmetry: design the product remotely and pay no VAT; service it afterward and the full rate applies.

Most significantly, local branches of foreign companies receive no benefit whatsoever. These operations will continue paying the standard 14 per cent rate, the Tax Authority treating them as domestic transactions given their permanent Egyptian presence. For multinationals operating through local subsidiaries rather than contracting with independent Egyptian service providers, the new rules change precisely nothing.

The Offshoring Proposition

Egypt’s pitch to global technology firms rests on three pillars that sound either visionary or delusional depending on execution: a massive talent pipeline producing 50,000 ICT specialists annually, multilingual capabilities spanning 20 languages, and $6 billion in state infrastructure investment.

The numbers are genuinely impressive. Egypt has scaled its tech training programmes 200-fold in seven years, from 4,000 trainees in 2018 to 500,000 in the most recent fiscal year. With 760,000 university graduates emerging annually from a young and growing population, the raw material exists.

What Egypt offers that Poland, Romania, India, and the Philippines don’t is proximity to European markets coupled with significantly lower labour costs. Cairo sits in a compatible time zone for both European and Middle Eastern clients, whilst offering wage rates that make Eastern European hubs look expensive. The multilingual workforce — a legacy of Egypt’s position as a regional crossroads — provides access to markets from Francophone Africa to the Gulf.

IT Minister Amr Talaat has been explicit about moving beyond basic business process outsourcing toward high-value engineering, AI development, cloud computing, and semiconductor work. Whether Egypt’s education system can deliver graduates capable of competing for these roles at scale remains the essential question.

The Implementation Test

The challenge, as with most Egyptian reforms, lies in the gap between policy announcement and street-level reality. The comprehensive guide to exported services runs to dozens of pages of scenarios, exemptions, and documentation requirements.

For the multinationals signing up to create 70,000 jobs, the new VAT clarity reduces one source of friction. But Egypt’s broader investment climate — inflation near 17 per cent, persistent foreign exchange bottlenecks, and a public sector that makes Soviet bureaucracy look nimble — ensures plenty of friction remains.

Yet there’s something to be said for simply showing up. Whilst other African nations issue strategy documents about becoming tech hubs, Egypt has convinced Accenture, Capgemini, and Deloitte to commit to five-figure hiring targets. That requires more than cheap labour — it demands infrastructure, political stability (relatively speaking), and reasonable confidence that promised tax treatments will materialise.

The bottom line

Egypt’s tax clarification removes a genuine barrier for service exporters. Combined with aggressive talent development and high-level political backing, Cairo has assembled the elements of a credible offshoring value proposition.

The global skills gap isn’t closing. Egypt’s bet is that it can fill some portion of it before its infrastructure or economic instability gets in the way. Given the alternatives, it’s a wager worth watching.