Egypt’s Tax Digitization Continues

Coskun Antal
December 8, 2020

Scope of mandatory e-invoice clearance extended

The global trend of Continuous Transaction Controls (CTCs), having spread from Latin America to Europe and more recently to Asia, is now increasingly gaining popularity in Africa. Egypt is modernizing its tax control system, and one of the most important elements of this is implementing the digital processing of invoices.

The electronic invoice project is one of the pillars of the comprehensive digital transformation of the Egyptian tax system. The project’s aim is to create a central solution that enables the Egyptian Tax Authority (ETA) to follow all business transactions between companies (B2B), through the instant exchange of invoice data in electronic format. The e-invoicing platform will enable digital capturing of invoices circulating in the country starting with B2B invoices and later also business to consumer (B2C) invoices.

Legal Background

On 26 March 2020, the Egyptian Minister of Finance published a decree (No:188-2020) announcing the decision to introduce a mandatory clearance e-invoicing framework which means all issued invoices must be digitally transmitted to the tax authority in real-time before being sent to the customer. The decree states that all VAT-registered businesses are obliged to issue an electronic invoice containing the issuer’s electronic signature and a unified code for the goods or service.

On 2 August 2020, the ETA published another decree (No:386-2020), effectively listing 134 companies who are obliged to issue electronic tax invoices for their sold goods or rendered services as of 15 November 2020. This date marked the first phase of a broader roll-out of the e-invoicing obligation that is set to gradually cover the entire national economy. In addition to the first wave of companies that must comply, voluntary adoption of the e-invoicing system is permitted, given that the conditions and controls are met.

A closer look at the e-invoicing flow

E-invoices must be created in JSON or XML format and contain the issuer’s electronic signature and a unified code for the goods or service. After signing, the e-invoice is sent to the ETA’s system to confirm the electronic signature and the content of the invoice. The ETA receives the invoice and issues a single coding for each product (item) in the invoice and stores it in the ETA system.

The ETA approves the invoice and sends a notification to the buyer and the seller who should be registered with the ETA system. The e-invoice is shared through different ways such as web services, SMS, e-mails, or mobile applications. The ETA’s system will store, save, share, audit, analyze and archive the data from the e-tax invoice system. However, companies must also archive their e-invoices in a human readable PDF format ready for inspection by the ETA upon request.

What’s next?

On 20 November 2020, the ETA published yet another new decree (No:518-2020), which lists 347 companies, as a second phase, who are obliged to issue electronic tax invoices for their sold goods or rendered services as of 15 February 2021. Even though it’s not yet formally binding, it was announced through the media that by the end of June 2021 the e-invoicing system will be mandatory for all companies. Taxpayers in Egypt must be prepared for the mandate that will, at some point, require them to implement e-invoicing.

Take Action

Sovos has more than a decade of experience keeping clients up to date with e-invoicing mandates all over the world.

Sign up for Email Updates

Stay up to date with the latest tax and compliance updates that may impact your business.

Author

Coskun Antal

Coşkun is Regulatory Specialist at Sovos, based in Istanbul. Coşkun monitors and interprets both the regulations and associated technical specifications issued by tax authorities. He has a Bachelor’s degree in Electrical Engineering from Istanbul Technical University.
Share This Post

Latin America VAT & Fiscal Reporting
May 20, 2020
Sovos Acquires Taxweb, Extends Tax Determination Capabilities in World’s Most Challenging Compliance Landscape

Earlier this month Sovos announced its second acquisition of 2020, completing our solution for Brazil with an unparalleled offering that solves tax compliance in the place where it is most challenging to do so.  Too many companies doing business in Brazil have been burdened by managing multiple point solutions for continuous transaction controls (CTCs), tax […]

IPT VAT & Fiscal Reporting
February 26, 2021
Meet the Expert: Andrew Hocking, VP of Consulting and Compliance Services, Europe

Meet the Expert is a series of blogs to share more about the team behind our innovative software and managed services. As a global organisation with tax experts across all regions, our dedicated team are always keeping abreast of the latest regulation changes to ensure our customers stay compliant. What is your role and what […]

E-Invoicing Compliance EMEA
February 25, 2021
From Tax Control to Tax Collaboration: Russia’s Pioneering a New Approach

The trend of real-time data collection as a tax control mechanism by tax authorities across the world is not much of a surprise now, quite the contrary. One by one and at increasing speed, governments are rolling out local adaptions of Continuous Transaction Controls regimes, more commonly referred to as CTCs. However, new trends are […]

North America Sales & Use Tax
February 24, 2021
Mississippi Sales Tax Nexus Changes

The Supreme Court’s 2018 ruling on South Dakota v. Wayfair, Inc. had a ripple effect across the country on how out-of-state businesses must collect and remit sales tax. The Mississippi sales tax nexus is just one example of how remote sellers and marketplace facilitators need to ensure they remain compliant as regulations are updated. Below […]

ShipCompliant
February 24, 2021
Making the Most of the Annual DtC Wine Shipping Report

By Andrew Adams Andrew Adams is the editor of the Wine Analytics Report and a regular contributor to Wine Business Monthly magazine. Adams grew up in the city of Sonoma, Calif., and graduated from the University of Oregon with a degree in journalism. In addition to working at daily newspapers for more than a decade, Adams worked for […]

EMEA VAT & Fiscal Reporting
February 23, 2021
Advantages of Working with a Global Service Provider

The rapid rise of digitisation continues to transform companies’ business processes. Companies have either begun their digital transformation as a result of compulsory mandates or are voluntarily making the change. While digitalisation provides time, cost and workforce efficiencies, it has enabled greater cross-border business. The increasing digitisation of tax has seen companies look to third-party […]