All businesses and self-employed professionals in Egypt have to register with the Egyptian Tax Authority (ETA) e-invoice system before 15 December. The new system, which the ETA has been working on since 2020, obliges all companies registered for value-added tax (VAT) and selling taxable goods or services to register and submit electronic invoices on the ETA’s online portal.
The law affects self-employed professionals, such as lawyers, consultants, artists, doctors, and engineers.
Under the new system, any entity, whether company or individual, that sells a product or service must register on the ETA’s e-invoicing website. The account will also serve as that entity’s tax return. In order to bill a customer, the entity will need to produce electronic invoices that are automatically given a serial number and copies automatically filed as income on that entity’s tax return.
At the end of the year, the amount of tax due is based on total revenues minus legitimate deductions for expenses.
However, in the run-up to the deadline, some professionals have complained of difficulties in complying in a timely way with the new system. Last week, dozens of lawyers staged a protest against it in front of the Bar Association in Cairo.
Abdel-Halim Allam, head of the Bar Association and chairman of the Arab Federation of Lawyers, said more time and information was needed before enforcing the e-invoicing system.
Many lawyers are based in remote areas, which would hamper compliance, he said. Another complicating factor is that lawyers do not bill their clients at regular intervals, and fees are generally split up into various instalments, with many of these depending on ongoing procedures.
“The Bar Association appreciates the efforts of the Ministry of Finance and the Tax Authority to digitise bureaucratic processes,” Allam said. “We are the first to respect the law. We have more than 420,000 lawyers in the syndicate. Most of them have a tax ID card, as is required by the syndicate in order to obtain its services.”
Minister of Finance Mohamed Maait said he understood the lawyers’ concerns and therefore had ordered the creation of a joint committee from the Ministry of Finance and the Bar Association to study the problem and devise solutions that would allay fears about registering with the ETA’s e-invoicing online platform.
According to Allam, lawyers oppose compulsory registration on the new system for various reasons, such as the increased costs it would entail. Lawyers’ sub-syndicates across the country have indicated that they will sustain their protests and continue to refuse to register until the joint committee completes its work.
Maait promised to grant a grace period until the committee completes its work and the ministry takes the necessary decisions based on its recommendations. He said he was confident that all the problems the lawyers had identified with the e-invoicing system would be resolved.
When the system is in place, the ETA will not accept payment records other than e-invoices. Among the problems that the lawyers face is that some are unable to document all the overheads they incur as part of their job, such as the fees they pay in court, communications expenses, electricity bills for their offices, or petrol for transportation.
For these and similar reasons, lawyers should be exempt from the obligation to register and use the e-invoicing system, said Nabil Abdel-Salam, a member of the Egyptian Bar Association.
“We’re not saying no just to say no. Lawyers are not selling goods or wares which are of a specific value. Ours is a creative profession that involves dealing directly with clients who set the parameters. Also, when a lawyer takes on a case, it could last for maybe 10 years. That is also a factor that needs to be taken into account when calculating taxes.”
Doctors have also begun to protest against the new e-invoicing system for similar reasons. Mustafa Ahmed, a professor at the Faculty of Medicine at Ain Shams University in Cairo, said the decision to impose the system on the providers of certain professional services was taken without sufficient study.
He anticipated more objections, above all from smaller medical-service providers. It would be hard to conceive of a uniform invoice when services vary from one private clinic to the next and fees vary from one doctor to another, he said.
He added that the system should be introduced gradually, starting with major physicians and medical centres, and that there should be a sufficient period for educating and training people in it.
*A version of this article appears in print in the 8 December, 2022 edition of Al-Ahram Weekly.