Last Wednesday marked the final deadline for companies to join the electronic invoice system set up by the Egyptian Tax Authority (ETA).
An electronic invoice (e-invoice) is a digital document that records the buying and selling of goods and services. Under the ETA system, they are signed electronically and are sent or received in real time and are then verified by the ETA.
This electronic billing system is characterised by a unique number being given to each invoice and a unified form and content for each invoice within the system.
According to the ETA, some 2,273 companies have uploaded electronic documents to join the e-invoice system, with a total of 44 million electronic documents registered so far.
The electronic invoice system launched its first mandatory phase in mid-November last year, requiring 134 companies to register. The second phase was applied on 15 February 2021, covering 347 companies. The third and final phase, which ended on 15 September, included all other companies registered with the ETA Taxpayer Centre.
The ETA has warned non-compliant companies that have not joined the system that they will face legal measures as of 1 October and that they will be excluded from the top taxpayer category. This means that they will lose technical support and assistance, including export subsidies.
It said that companies and other legal individuals are obliged to register their sales and purchases on the electronic system. After joining the electronic invoice system, they will be required to register their sales and purchases on the ETA’s electronic system in accordance with Article 35 of the Unified Tax Procedures Law.
A tax invoice or receipt in electronic form must be issued in accordance with Article 37 of the same law. Companies not covered by the mandatory decision (not top corporate taxpayers), according to the ETA, can use the electronic invoice system if they wish to do so.
An electronic receipt system will start with the trial operation of the automated unified tax procedures system to be launched for top and middle-income companies at the end of December.
Minister of Finance Mohamed Maait said in a press statement that the first phase of the electronic receipt system would be implemented within six months and was based on a central electronic system that enables the ETA to monitor all commercial transactions of goods and services between businesses to consumers (B2C) in real time.
“This will contribute to integrating the informal economy into the formal economy, reduce tax evasion, establish the foundations of tax justice, achieve equal opportunities in the Egyptian market, and facilitate tax examination procedures in the shortest possible time,” he said.
He added that the ministry was moving ahead with the implementation of a national project to modernise and automate the tax and customs systems, saying that artificial intelligence (AI) technologies will be used to facilitate and digitise procedures in 2022 to ensure that all online business transactions are monitored and controlled.
The electronic invoice system has thus far revealed 1,700 cases of tax evasion, with a total value amounting to LE3 billion, he said.
One of the companies that have joined the system, the Juhayna Group, said the e-invoice system had affected the way it did business. In a press statement, the company said the system had saved it time and effort in dealing only with tax-registered persons and companies and saving data on tax examinations.
However, it said there had been difficulties in importing analyses of sales invoices from the ETA’s electronic invoice system, as it was difficult to import thousands of invoices per day when the company’s daily sales are estimated at about 15,000 invoices.
“We hope to see this fixed by the ETA soon,” the company said.
Mohsen Abdel-Aziz, deputy head of the Technical Office of the Egyptian Junior Businessmen’s Association, said the e-invoice system had short-term and long-term benefits.
In the short run, the system would help to verify company documents before issuance, enhancing the tax status of companies by classifying them as low risk, updating and developing the exchange of invoices, and helping companies to prepare reports and conduct quick and accurate analyses, he said.
Long-term benefits include a reduction of administrative work such as the need to archive paper invoices and reducing audit procedures and facilitating tax refunds.
“All this will help to support the integration of the informal economy into the formal one,” he concluded.
*A version of this article appears in print in the 23 September, 2021 edition of Al-Ahram Weekly