Electronic improvements on tax

Nahla Abul-Ezz, Thursday 24 Mar 2022

Al-Ahram Weekly pinpoints the advantages of Egypt’s new system of electronic tax returns.

Electronic improvements on tax
The deadline for submitting tax returns is the end of March

March is the deadline for filing tax returns for individuals, three months after this year’s returns began to be received in January. The deadline for companies is in April. This is also the second year that the Egyptian Tax Authority (ETA) has been processing taxes electronically by accepting tax returns without the need to interact directly with officials.

All tax returns can be submitted electronically online, making it easier for taxpayers to submit their returns around the clock and saving time, energy, and money, according to Reda Abdel-Qader, head of the ETA.

Abdel-Qader said that the filing of tax returns was a legal obligation for taxpayers, who should take the initiative and not wait to the last minute before submitting their returns.

He said that the owners of small, medium-sized, and micro businesses could benefit from the simplified tax process, as stipulated by Law 152/2020, and pay a percentage of their taxes by registering with the Small Enterprises Development Authority and filling in the relevant forms.

The digital submission of tax documents, whether tax returns or invoices, could help businesses to streamline processes and increase revenues, he said.

Ragab Mohtadi, a tax expert and former director of inspections at the larger taxpayers centre, said the move towards electronic filing had eliminated drawbacks in the manual system, such as paperwork causing errors and taxpayers having to go to ETA offices in person, especially as the deadline approached, causing congestion and possible errors.

He said that over recent years the ETA has succeeded in overcoming difficulties in transitioning to a digital system with the support of the Ministry of Finance. It has provided taxpayers with technical support at 227 tax offices, 29 computer branches, 21 ETA tax training centres, and 20 tax guidance offices at chambers of commerce across the country, he said.

There are also mobile tax vehicles in various governorates offering technical support and tax guidance to taxpayers free of charge.

Abdullah Al-Adli, a chartered accountant, said that the ETA’s digital transformation, including electronic invoices and tax returns, is part of Egypt’s 2030 Vision, but that it needed a more solid technology infrastructure before it could run smoothly.

Al-Adli said that he had had to submit the tax return of one of his clients, a major taxpayer, several times before it appeared in the system due to glitches on the website.

He added that there have been changes that have positively impacted dealings with the ETA, however, and that these will be reflected in tax revenues. Another problem with filing digitally, he said, was that the process should have been introduced gradually to ensure that everyone was familiar with it.

In Saudi Arabia, for example, merchants were given one year to substitute electronic invoices for paper ones, he said.

Erfan Fawzi, secretary of the Tax Legislation Association, said tax returns were now to be submitted electronically to the ETA by all, since all Egypt’s taxpayers have been required to submit their returns electronically, and not on paper, from last year.

“But there are currently two systems to submit tax returns,” he noted. “First, there is electronic submission for major taxpayers and entrepreneurs and medium-sized taxpayers. Second, there is the other way of submitting returns by all other taxpayers at tax offices.”

Fawzi said the penalty for not filing a tax return within 60 days of the deadline could reach a LE50,000 fine or escalate to imprisonment for repeat offenders. If taxes are still not filed more than 60 days after the deadline, the penalty could be a fine of between LE50,000 and LE2 million.

The law states that tax evasion by eligible taxpayers as stipulated in the tax law will be the responsibility of the official partner, manager, managing director, designated board member or board chairman of a company in charge of management. Such persons must meet the burden of proof to show that they were not aware of any tax evasion, should this take place.

*A version of this article appears in print in the 24 March, 2022 edition of Al-Ahram Weekly.

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