Egypt.. the growing number of companies joining the electronic invoice.. and taxes: our goal is to limit the informal economy

Cairo, Egypt (CNN) — More than 150,000 companies have joined the electronic billing system after its launch two years ago, raising more than 300 million bills on the system.

An official at the Egyptian Tax Authority said that the authority aims to have 1.5 million taxpayers joining the system, whether companies or free professionals such as lawyers and doctors, to the bill before December 15, with the aim of limiting the informal economy and increasing tax revenues.

Egypt is one of the leading Arab countries in applying the electronic bill system, with the aim of assisting in the digital transformation of commercial transactions, dealing with the latest technical methods, verifying the validity of the data of the source and recipient of the bill and its contents in form and subject matter, eliminating the parallel market and the informal economy, and achieving the principle of equal opportunity and justice between companies. Operating in the market, facilitating and accelerating tax procedures.

Dr. Saeed Fouad, advisor to the head of the Tax Authority, said that about 150,000 companies have registered to join the electronic invoice system, and have raised more than 300 million electronic invoices since the system began operating in November 2020. Money companies, all the way to the errands of Greater Cairo and finally the rest of the governorates.

The electronic invoice is a standard document with components, form, unified design, and content regulated by the laws and regulations related to the work of the electronic invoice. It also requires a valid and effective electronic signature of the issuer of the invoice. The system provides complete security for the invoice data exchanged between companies.

Fouad added, in exclusive statements to CNN in Arabic, that the Tax Authority has set the middle of next month as the last date for joining the electronic bill system with the aim of counting the tax community and identifying financiers, noting that joining the system does not mean issuing invoices, but recording data in the system in preparation for issuing the electronic receipt for self-employed people such as doctors. lawyers in the coming period.

And the electronic receipt system, which is an electronic central system that enables the Tax Authority to follow up all commercial transactions for the sale of goods and the provision of services between sellers in sales and service centers and between consumers in real time, as well as verifying their validity through electronic integration with the vending machines of merchants and service providers by installing sales movement monitoring devices. with it.

Said Fouad explained that it is difficult to count the number of companies that are not registered in the electronic invoice system until after the end of the deadline for registration in the middle of next month. However, all major companies have already joined the system, and have started raising invoices on the system regularly, which contributed to increasing tax revenues.

The total revenues of the state’s general budget amounted to 161.6 billion pounds ($6.6 billion) during the period from July to August of the 2022/2023 fiscal year, increasing by about 21.7 billion pounds ($844.3 million), a growth rate of 15.5 percent. Tax revenues contributed about 82.7% of total revenue.

The advisor to the head of the Tax Authority indicated that the Ministry of Finance obligated government agencies not to deal with companies that do not join the electronic invoice, and only electronic invoices will be considered in deducting or refunding value-added tax, as well as in proving costs or expenses when submitting tax returns, when the system is completed in April of next year.

Saeed Fouad revealed that the Tax Authority aims to register about 1.5 million taxpayers from companies and individuals with an electronic invoice system by the end of the deadline in the middle of next month, divided between 400,000 new companies, whether money companies or individuals, and the rest are self-employed, such as doctors, lawyers, accountants, and others.

He explained that the companies joining the electronic bill system are currently raising electronic bills and paying taxes, while the self-employed will register to join the bill system, and await the completion of the electronic receipt system to deal with receipts, expecting the completion of the electronic receipt system in mid-2025.

Saeed Fouad pointed out the impact of applying the electronic invoice system on facilitating investment procedures, by facilitating tax examination procedures for companies, in the shortest possible time, ending frequent collection visits, and examining purchase and sale invoice files electronically, with the possibility of remote examination and facilitating tax refund procedures – which The biggest problem facing VAT registrants was the simplification of settlement procedures between companies through the real-time exchange of automated billing data, which the system provides as a result of its linkage and integration with the accounting systems of financiers.

Muhammad Al-Bahi, a member of the Board of Directors of the Federation of Industries and Chairman of the Tax and Customs Committee of the Federation, said that the Federation participated in preparing the electronic invoice system by holding periodic consultative meetings with the Tax Authority, in addition to that, the Federation organizes permanent seminars for members with the leaders of the Ministry of Finance and the Tax Authority to raise awareness of the tax system. New, and respond to any inquiries and comments from the participants.

Al-Bahi added, in exclusive statements to CNN in Arabic, that the industrial sector benefits from the application of the electronic bill system, which achieves tax justice, because there is a large sector of establishments that do not pay taxes, which violates the principle of equal opportunity and makes it difficult to compete with it, but with the application of the system, the state can limit the informal economy. and cases of tax evasion.

The Tax Authority obligated individual establishments, whether commercial, industrial, service or professional, and all self-employed persons to register in the electronic invoice system no later than next December 15, and to send their invoices in the event of dealing with establishments registered with the Tax Authority on the electronic invoice system.

Muhammad Al-Bahi stated that the total members of the Federation of Industries amount to about 104,000 companies that have joined the electronic invoice system. Because joining the system is not optional, adding that companies are currently working on sending invoices on the system, and there are permanent consultations between members of the union and the tax authority to respond to inquiries during the application period.

The Tax Authority has previously denied the validity of what was circulated on social media regarding the announcement of some companies about their programs and systems as an intermediary for sending invoices on the electronic invoice system as systems approved by the Authority.

The Chairman of the Tax and Customs Committee of the Federation of Industries stressed the importance of applying the electronic invoice system in inventorying the informal economy, facilitating tax examination procedures for companies, in the shortest possible time, ending repeated collection visits, and examining the files of sales and purchase invoices electronically, with the possibility of remote examination and facilitating tax refund procedures. In addition to achieving the state’s interest in increasing tax revenues, given that a large proportion of society avoids paying taxes.