Two places on the same Sharm street can serve the same plate of pasta, and only one of them may have to add 14% VAT. Restaurant VAT in Egypt does not depend on the food. It depends on the licence you hold and on where and how you sell. The Egyptian Tax Authority (ETA) set the rule out in a clarification on 18 May 2025: restaurants and cafés licensed by the Ministry of Tourism charge 14%, and non-tourist outlets are exempt unless they meet one of a short list of criteria.
Below are the criteria one at a time, with Sharm examples, and what follows from them, as of October 2026. If you are still choosing a licence, our guide to opening a restaurant or café in Sharm El Sheikh covers that side.
Restaurant VAT in Egypt: do restaurants and cafés charge 14%?
Some do and some do not. The line runs through the licence first and the criteria second:
| Your outlet | VAT on meals and drinks (as of October 2026) | Basis |
|---|---|---|
| Restaurant or café licensed by the Ministry of Tourism as a tourist establishment | 14% | ETA, 18 May 2025 |
| Non-tourist restaurant or café that meets none of the ETA criteria | Exempt | ETA, 18 May 2025 |
| Non-tourist restaurant or café that meets any one criterion | 14% | ETA, 18 May 2025 |
The rate, when meals are taxable, is the standard Egyptian VAT rate of 14%. The reduced 5% rate covers machinery and, since 29 July 2026, medical devices; it does not apply to meals.
"Exempt" describes the meals, not the business: an exempt café is still an income-tax taxpayer and, in Sharm, still issues e-receipts.
Which restaurants and cafés must charge 14% VAT? The ETA criteria
A restaurant or café without a tourist licence moves into 14% VAT if it meets any one of these criteria, as set out by the ETA on 18 May 2025:
| Criterion | What the ETA lists | The question to ask about your outlet |
|---|---|---|
| Location | Inside a mall, a residential compound, a tourist site or an airport | What kind of property is the unit in, exactly? |
| Chain or brand | Part of a chain, or trading under a known brand | Does the outlet belong to a chain, or use a brand customers recognise? |
| Online sales | Selling through apps or websites | Do you take orders through a delivery app or your own website? |
| Service level | Meals or service at a tourist standard | Does your service match what a tourist restaurant offers? |
| Service fee | A service fee charged to customers | Does a service charge appear on your bills? |
One criterion is enough. A café that meets four of them is in the same position as a café that meets one.
Some criteria are mechanical: a mall is a mall, and a delivery app listing is visible to anyone. Others call for judgement. "Tourist site" matters most in a resort town, where whole districts are built around visitors, and "tourist standard" depends on what you actually serve, not on a sign over the door. Check those two against your own address, licence and menu rather than a list.
Tourist licence or shop licence: which side of the line are you on?
The first question is the licence. Under Law 8/2022 (Official Gazette, 6 March 2022) and its executive regulations (PM Decree 705/2023), hotels, restaurants, cafés, and diving, safari and marine centres share one licensing regime under the Ministry of Tourism. An outlet licensed on that track is a tourist establishment, and its meals carry 14% VAT.
The other track is an ordinary shop licence under the Public Shops Law 154/2019. A shop licensed that way may not call itself "tourist", so a "tourist café" sign over a Public Shops licence is a problem of its own. For outlets on this track, the ETA criteria decide the VAT position.
Running a tourist establishment without the Law 8/2022 licence carries fines of EGP 50,000 to 500,000, and repeat offences can bring prison, doubled fines and closure. Settle the licence question first; the VAT answer follows from it.
Does your café in Sharm charge VAT? Six examples
These are typical set-ups to show how the criteria work, not rulings on a particular outlet. Each assumes an ordinary shop licence unless the first column says otherwise. As of October 2026:
| Outlet | Criterion met | VAT on meals |
|---|---|---|
| A restaurant licensed by the Ministry of Tourism | Tourist licence | 14% |
| A small coffee shop on a residential street: no app, no service fee, no brand | None | Exempt |
| The same coffee shop after it joins a delivery app | Online sales | 14% |
| A franchise café trading under a known brand | Chain or brand | 14% |
| A juice bar inside a shopping mall | Location | 14% |
| A family restaurant that adds a service charge to every bill | Service fee | 14% |
Look at the third row. The shop, the menu and the licence are unchanged, yet the outlet now meets a criterion. That is the easiest change to overlook, and so is adding a service charge to the bill.
Taxable is not the same as registered: the EGP 500,000 threshold
The ETA criteria answer one question: are your meals taxable at 14%? A second set of rules answers another: when must you register for VAT, and what does registration involve? As of October 2026:
- Registration is compulsory once turnover reaches EGP 500,000.
- Some businesses must register whatever their turnover: importers for trade, exporters, distribution agents and table-tax suppliers.
- A registered business files a VAT return every month, by the end of the following month, or every quarter if it is in the simplified regime of Law 6/2025.
- A credit balance, where the VAT you paid on purchases exceeds the VAT you charged, can be refunded once it has carried forward for more than four tax periods, or after three months under Law 6/2025.
How the two sets of rules meet for your outlet decides the month from which you charge VAT, and the answer comes from your own turnover, sales channels and licence. A café that is close to the threshold and has just joined a delivery app is in a different position from a tourist restaurant opening its doors. Our VAT registration and returns service handles both the registration and the filing that follows.
What about the service charge on the bill?
If your bills carry a service charge, it matters in two ways. The first is settled: charging a service fee is one of the ETA's criteria, so a non-tourist café that adds one moves into 14% VAT on its meals (ETA, 18 May 2025).
The second is how the service charge itself is treated, for VAT and in payroll. We do not publish an answer to that in a general article. We answer it on your own bills and payroll records, together with the rest of your position.
Do you need e-receipts if your café is VAT-exempt?
In Sharm El Sheikh, yes. ETA Decision 484/2022 requires every income-tax and VAT taxpayer in the Sharm El Sheikh area who sells to consumers to issue e-receipts, from 1 November 2022. A café whose meals are exempt from VAT is still an income-tax taxpayer, so the duty applies to it too. Three consequences, as of October 2026:
- Sales to other businesses, such as a hotel buying your pastries, are documented by e-invoice, which is mandatory for all ETA taxpayers under Decree 323/2022.
- Costs that are not documented by an e-invoice or an e-receipt are not recognised. Buy from suppliers who issue them.
- If your outlet moves into 14% VAT, your e-receipts, your VAT return and your books have to show the same rate on the same sales.
Our guide to e-receipts in Sharm El Sheikh explains who is covered and how to set the system up.
Does the simplified regime (Law 6/2025) remove VAT for a small café?
No. Law 6/2025, in force since 1 March 2025, changes how a business with turnover up to EGP 20 million pays income tax: as a percentage of turnover, from 0.4% below EGP 500,000 up to 1.5% between EGP 10 million and 20 million. It does not remove VAT. For a VAT-registered café, the differences are these:
| Standard filer | Café in the simplified regime | |
|---|---|---|
| VAT on taxable meals | 14% | 14% |
| VAT return | Monthly | Quarterly |
| Refund of an excess VAT credit | After more than four tax periods | After three months |
| Income tax | On profit (22.5% for companies) | 0.4% to 1.5% of turnover |
| E-invoices and e-receipts | Required | Required to stay in the regime |
Joining locks you in for five years, so look at your numbers before you choose. Our guide to Egypt's simplified tax regime in numbers sets out the bands and the exclusions.
Live music or a show night: entertainment tax is separate
VAT is not the only tax a venue can owe. If your restaurant or café runs shows, parties or a disco night, the Real Estate Tax Authority collects entertainment tax. As of October 2026 the rates are 25% for shows at hotels, nightclubs and casinos, 30% for discos and 20% for other venues. It is paid within 24 hours, and 10% is added for each day of delay, up to 10 days. It is a different tax from VAT, with its own authority and its own deadlines.
What happens if your café should have been charging VAT?
A wrong VAT status can come to light at an inspection, and the limitation period is 5 years, or 6 in cases of evasion. The general penalty rules, as of October 2026:
| What is added | Rule |
|---|---|
| Late filing | EGP 3,000 to 50,000 up to 60 days late; EGP 50,000 to 2 million beyond that |
| Additional tax | 20% or 40%, halved by agreement before the appeal committee |
| Late interest | Central Bank of Egypt rate + 2%, capped at 100% of the tax (Law 7/2025) |
If a VAT dispute with your tax office is already open, Law 152/2026 allows settlement requests until 31 December 2026, and VAT is one of the taxes it covers.
How we help restaurants and cafés with VAT
We start from your licence, address, sales channels and recent turnover. From those we tell you which side of the line your outlet is on, whether and when you must register, and how to set your e-receipts so the rate on every sale matches the return. Then we file the returns and keep your books consistent with them. Consultations are available in Arabic, English, Italian and Russian, at Office 314, Al Azizia Mall, Ras Kennedy, or on WhatsApp.
