Uganda is one of the first countries in Africa to have mandated real-time e-invoicing and receipt reporting. With the latest e-invoicing mandates, the government aims to improve transparency in the tax system and make doing business in the country easy.
The Uganda Revenue Authority (URA) has introduced a new e-invoicing system from January 1, 2021. All VAT-registered businesses in the country must use e-invoices submitted through the Electronic Fiscal Receipting and Invoicing Solution Server (EFRIS).
Since its introduction, EFRIS has helped Ugandan businesses improve transparency, compliance, and efficiency while issuing invoices. The EFRS system allows companies to use multiple methods to send B2B, B2G, and B2C invoices.
Compliance with the new e-invoicing system is mandatory, and non-compliance carries heavy penalties. Businesses must understand the Electronic Fiscal Receipting and Invoicing system and e-invoicing to avoid compliance issues.
In this post, we discuss the Ugandan e-invoicing model and the steps you should take to send compliant invoices when doing business in the country.
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What are the e-invoicing rules in Uganda?
E-invoicing in Uganda has been mandatory for all VAT-registered businesses since January 2021. The e-invoice in the country is electronic proof that a business transaction has occurred through the EFRIS.
The electronic invoice issued through the EFRIS system contains all the pertinent information like the names and addresses of the seller and buyer, the particulars of the goods and services rendered, etc.
The EFRIS system has emerged as a winner for the Ugandan government. Since its implementation, it has allowed for better transparency and tracking of e-invoices.
To better understand what an e-invoice is, read this Complete Guide to E-Invoicing
Who needs to comply with the e-invoicing regulations in Uganda?
All VAT-registered businesses, irrespective of their transaction load, are mandated to use the EFRIS system to generate e-invoices in Uganda. Companies must use the EFRIS system to create all B2B, B2G, and B2C invoices.
You should also remember that e-receipts issued by non-VAT-registered taxpayers in the country are not the same as e-invoices. If you plan to issue an electronic invoice, you must use the EFRIS system to generate the invoice.
Furthermore, if your business is VAT-registered, all your e-invoices must be generated through the EFRIS system and validated by the URA before they can be sent to the customers.
How to send compliant e-invoices in Uganda?
Sending compliant e-invoices in Uganda is simple once you have a system in place. Here are the steps detailing the process.
Step 1: Integration of your ERP or electronic fiscal devices with the EFRIS system for electronic fiscal receipting
Before your business can issue an electronic invoice in Uganda, you must take steps to adapt to the new guidelines. Integrating your ERP and electronic fiscal devices is one of the first steps to generating compliant e-invoices.
- You have four methods to send e-invoices to EFRIS. You can use a system-to-system connection, the URA web portal, Unstructured Supplementary Service Data (USSD), or a client application to send invoices to EFRIS.
- If you wish to use the system-to-system connection, you must ensure that your ERP or business management software complies with the EFRIS system. You can find the list of accredited software suppliers on the URA web portal.
- If you are using ERP software, you must ensure a seamless connection and integration with the Electronic Fiscal Receipting and Invoicing system.
- You will need to integrate your ERP software with the EFRIS only once. After successful integration, all your invoices should be directly sent to the URA for verification.
Ensuring your ERP software is set up and running according to the URA guidelines is essential. Storecove can help you establish a custom system for compliant e-invoicing and VAT reporting in Uganda. Please feel free to talk to our tax expert.
If you are a small business and can’t afford ERP software, you can generate a compliant e-invoice using the EFRIS web portal or client application. You can also integrate your electronic fiscal devices into the system for automation.
The client app is available to install on smartphones, laptops, and desktop computers that you can use to generate a compliant invoice directly.
You can even use your USSD quick codes that support a real-time connection between your mobile network and EFRIS.
Step 2: Record every sale using your ERP software
Ensure that you record all sales through your ERP software or business transaction systems integrated with the EFRIS system. You will need to integrate your ERP software with the EFRIS only once.
After successful integration, all your invoices should be directly sent to the URA for verification.
Compliant electronic invoices are generated in real time, and you can issue that at the point of sale to your customer.
Step 3: Generating the e-invoice
Once your sales data is sent to the EFRIS in an encrypted format, it is decrypted and validated. The system then converts every transaction into an electronic invoice and adds a QR code and a verification number.
The electronic invoice generated by the EFRIS system will also contain a unique invoice number and fiscal document number that can be used to track it. The system then transmits the generated electronic invoice automatically to your ERP software.
Step 4: Print the electronic invoice and send it to your customers
The final step of the process is printing out your EFRIS-generated electronic invoice to send to your customers. Unlike many other countries, the URA allows you to send your customer a hard copy of your invoice via email or your ERP software.
You or your customer can verify the invoice details and check if it is approved by logging on to the URA portal and entering the invoice number.
Characteristics of the electronic invoice in Uganda
All the invoice issues in Uganda are through the EFRIS invoicing solution. Whether you use the EFRIS portal, USSD, customer application, or system-to-system connection, your electronic invoice will be identical in format and detail.
A compliant e-invoice will have the following four sections:
- Section A: Seller’s details
- Section B: URA information
- Section C: Buyer’s details
- Section D: Goods and Services details
- Section E: Tax details, including verification code
All the sections are generated automatically according to the information you enter during the process.
Details present on an Uganda Revenue Authority-compliant invoice
The URA might reject your e-invoice if it does not have the correct information. A typical e-invoice should have the following details:
- The business registration number and tax identification number of the seller
- Buyer’s and seller’s contact number
- An invoice number
- QR verification code
- Particulars of the transactions
- Date and time
As the EFRIS system generates all tax receipts, you don’t have to worry about following a specific format from your end. Even when using ERP software, once it is integrated with the EFRIS, the invoices will be generated by the system irrespective of the format used by your ERP.
The invoice generated by the EFRIS system is automatically authenticated and signed using your identification numbers and credentials. There is no need to use special software to sign the document digitally.
What should businesses do to comply with electronic invoice regulations in Uganda?
It is important for businesses to comply with electronic invoicing regulations in Uganda. Failing to abide by the rules can carry heavy penalties and other punitive measures.
Although you can use the web portal, client application, or USSD to generate e-invoices, e-invoicing software is the easiest. It is easy to set up and integrate with the EFRIS system. Moreover, you need to establish the system-to-system connection just once.
You can use any URA-approved ERP and e-invoicing software to communicate seamlessly with EFRIS. Once you integrate the software into the EFRIS ecosystem, you can automate real-time electronic invoicing easily.
E-invoicing in Uganda is still in its infancy. Although the EFRIS system is relatively smooth, some glitches can create unforeseen problems. As the government gathers more data, they are bound to upgrade or introduce changes to the system.
Staying abreast of these changes is the best way to ensure you comply with the regulations.
Takeaway: Understand Uganda’s e-invoicing system to ensure compliance
Digital invoices are becoming the norm in Uganda, and it is crucial to ensure that you follow the URA guidelines while issuing them.
Businesses must use the EFRIS system to generate and send compliant e-invoices in real time. While you have different ways to access the EFRIS system, having a custom e-invoicing software solution is the best. That said, you must ensure that the software is compliant with EFRIS and approved by the URA.
Failing to comply with e-invoicing regulations in Uganda can be met by punitive action. Ensure that you understand the law to avoid non-compliance issues.
Let Storecove experts guide you regarding the e-invoicing rules in Uganda and help you develop a custom solution that is reliable and compliant with URA regulations. Please schedule a free consultation with one of our tax experts today for a head start!
More information about E-Invoice Requirements in Uganda?