What is the electronic invoice in Egypt:
An electronic invoice in Egypt is an “electronic” digital document with components and features that proves the purchase and sale of goods and services. So that the document is prepared, signed, sent and received, and the Tax Authority verifies it in real time. The electronic invoice in Egypt also obligates both companies and individuals to register their sales and purchases on the electronic system of the Tax Authority. In addition to obligating each taxpayer to issue a tax invoice or receipt in electronic form in accordance with Article 37 of the same law.
Procedures for executing the electronic invoice in Egypt: Procedures for executing the electronic invoice in Egypt:
Within the framework of the Egyptian Tax Authority’s endeavor to spread tax awareness and build bridges of trust with financiers. The Authority clarified all the information that facilitates the process of integration between the Authority and the electronic invoice system in Egypt. Including the procedures for executing the electronic invoice are as follows:-
First procedure:-
You must register in the electronic billing system. This is in accordance with the instructions sent by the Egyptian Tax Authority to companies.
The second procedure:-
It is the integration between the ERP system used in companies and the electronic invoice system in Egypt. For clarity, integration is achieved after companies receive the SDK sent from the department to each company. It is a document that explains how to make the necessary modifications to the ERP program so that it can deal with the API. This is because it includes a technical and detailed explanation of the integration procedures with the system, as well as mentioning new updates that may occur to the procedures. Then each company returns to the company implementing the used ERP system or the company’s IT team to implement the integration steps described in the sent SDK.
The third procedure: – Extracting the electronic signature certificate. That is, extracting the official signature of the supplier, in the form of an encrypted message, that complies with legal regulations. To implement this procedure, the electronic signature steps sent by the authority must be applied. Which:-
First, the financier went to one of the agencies affiliated with the Information Technology Industry Development Agency (ITIDA) of the Ministry of Communications and Information Technology.
Then, submit and sign the application from the responsible manager of the facility or its legal representative at the licensee’s premises. Provided that the financier shall have the right to sign on behalf of the facility in accordance with the commercial register.
After that, submit the originals of all documents and papers for review. For example, a copy of the official extract of the commercial register, the establishment decision or the declaration decision, and a copy of the tax card. In addition to a copy of the investment newspaper, companies or company contract, and a copy of the identity card of the responsible manager.
The fourth procedure for implementing the electronic invoice in Egypt:
It is the coding of goods and services. In other words, the financier must prepare a statement of the codes used by the company based on the Global Coding System (GS1), or an internal coding system that is linked to the Global Commodity Group Classification System (GPC). Then all data is sent to the Egyptian Tax Authority via e-mail. In the event of adding new codes or items before using the previous codes, the electronic tax authority will be contacted within a period of no less than two weeks from the date of issuing the invoice for the added codes.
The fifth procedure:- It is the start of the implementation of integration tests with the electronic invoice system in Egypt.
Subject to the electronic invoice system in Egypt:-
In order to ensure the success of the electronic invoice system in Egypt, the Egyptian Tax Authority decided that categories of financiers and companies were subject to the mandatory application of the invoice. And that, during the succession of the first, second and third stages, and they are:-
Initially, all companies registered with the CMF in Cairo were obligated.
And then those who are registered with the Center for Senior Liberal Professions Financiers (in Nasr City).
In addition, all the companies registered with the tax center of major financiers, which are 2,300 companies.
Also, companies that the state or any public legal person has provided support for by contributing more than 50% of the construction capital. However, only if the company sells goods or services.
Likewise, the units of: the local administration, public legal persons, and economic and service public bodies. In addition to, public sector companies, holding companies and their subsidiaries, and public business sector companies.
The form and conditions for issuing electronic invoices in Egypt:
It is worth noting that the Egyptian Tax Authority and the Ministry of Finance have identified a set of conditions that must be met in the invoice or electronic notification form to be approved. This is due to the financial desire to implement the service to the fullest and guarantee the rights of both employees and financiers of the tax community. These conditions stipulate the following:-
The invoice must include the electronic signature that was clarified in the procedures – of the issuing authority. Also, the unified code for the good or service mentioned on the invoice, which is obtained from the IRS.
Also, the company’s registration procedures in the electronic invoice system are required to be carried out using the tax registration number and the company’s email.
The necessary data must also be provided for the registration of the official of the company’s electronic tax invoice management system. For example, name, title, national number, mobile phone number or personal email.
Therefore, companies that have an “ERP SYSTEM” (a system for issuing invoices) must implement the necessary steps to integrate with the electronic tax invoice system at the authority. In addition to implementing test cases for system functions.
Among the conditions, is also the use of the portal of the electronic billing system (Portal). Especially for companies that do not have an “ERP SYSTEM” (a system for issuing invoices) according to the criteria set by the tax authority.
Hence, it is required to start issuing invoices electronically through the actual operating environment of the system only.
The goods registered in the invoice or notice must be local. This is because the goods imported from outside the Arab Republic of Egypt are not included in the electronic invoice system except by reselling these goods to persons or companies inside the Republic. Thus, the transaction is subject to the electronic invoice system in Egypt.
Advantages of the electronic invoice system for merchants:-
Although the use of the invoice is mandatory. As it has become an obligation for all Egyptian merchants to register in the system, whether by their own will and desire or in implementation of legal regulations, the system has many advantages and positive characteristics that benefit the merchant. Thus, it pushes him to search for registration procedures and quickly join the automated billing and notifications system. Certainly, these advantages are as follows:-
Expanding the scope of local trade: where the electronic invoice gives an opportunity to deal with government units and public bodies. As well as, public sector companies and the public business sector. Which leads to the expansion of the trader in his trade by opening large markets, which becomes within his capabilities to deal with them.
Benefiting from export subsidies: because failure to register in the electronic invoice system results in depriving the Egyptian merchant of export subsidies.
Reducing the administrative burden and reducing labor: Invoices are exchanged between companies in the electronic system with one click within a time not exceeding a few minutes. However, in the case of paper transactions, a single invoice would go through several stages on more than one employee. For example, the clerk and the administrator who reviews the paper and then the representative who delivers the invoice to the companies.
Saving some variable costs: from the money spent on papers, archiving papers, printing and sending costs.
Making a tax refund settlement on export inputs: It is not allowed for exporting traders to refund the tax on their export inputs, or make a settlement between the value of the subsidy due to them and the value of the taxes due to the tax authority resulting from their activity. Such as income tax and value added tax, except after joining the electronic invoice system.
Simplifying tax refund processes: As a result of the electronic transaction, all tax refund procedures can be implemented, as well as preparing or submitting returns without the need to complete invoices with companies as happens in the traditional way.
In addition, the position of the tax trader was promoted: by classifying his company among the companies with low tax risks. Whereas, the failure to implement the electronic billing system results in the company being classified among the high-risk companies, as it is in violation of the law and is not tax-compliant.
