In March 2020, Egypt’s Minister of Finance issued Decree no. 188, mandating an electronic invoice for all taxable transactions. To comply with e-invoicing regulations, you need to:
- Register your company with the invoicing system;
- Electronically sign invoices;
- Ensure all invoices have a Unique ID (UUID).
By January 2022, Egypt’s VAT will no longer be deductible from paper invoices. All companies in the country must have completed four phases of transition to the acceptable e-invoicing system.
This article will discuss e-invoicing in Egypt, how it works, and everything you need to know to comply with e-invoicing regulations in Egypt.
Let’s dive in.
Read also: E-invoicing Regulations Per Country Overview
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What is e-invoicing in Egypt?
E-invoicing in Egypt generates an electronic invoice on all transactions eligible for tax in the country. It is a commercial document on sales activities and a system for keeping records of taxable transactions.
This digital invoice serves the same function as the traditional paper invoice in Egypt. When you purchase a product, the digital invoice you issue to the buyer will show the product details and information about you.
By January 2022, all public sector companies, economic authorities, and state services in Egypt will no longer issue paper invoices.
What are the main features of the E-Invoice in Egypt?
The e-invoicing system in Egypt has its specific characteristics and components. It allows users to prepare and share invoices electronically, reviewed by the Egyptian Tax Authority (ETA).
Let us look at some of the e-invoicing system’s features.
It is electronic
All business owners in Egypt have to prepare and sign their e-invoice using a valid e-signature digitally.
Statement of transaction
The e-invoice in Egypt is a commercial document. As such, it contains information related to specific transactions concluded.
It is revocable
The seller can amend or delete an e-invoice because it is proof of transaction. For instance, if you receive an invoice on a purchase but the pricing or date of the transaction is wrong, you can revoke it.
It is transferable
Before an e-invoice becomes valid, it has to be verified by the tax authority. The staff check if your organization’s e-signature and information provided comply with the requirements for e-invoicing in Egypt.
After the review, the tax authority will issue a unique number on the e-invoice to ensure that it is traceable and retrievable. In compliance with Egypt's e-invoice reform, your organization should prepare the e-invoice in a transferable format.
It can be rejected
Suppose you purchase a product and the seller issues you an invoice showing an incorrect price or quantity. In that case, you have the right to reject it.
So complying with the e-invoice regulations in Egypt means your e-invoicing system must be accurate and adjustable.
However, note that buyers are required to reject this e-invoice within a specific period set by the ETA.
What is the main content of the E-Invoice in Egypt?
An e-invoice that complies with the requirements of the e-invoicing mandate in Egypt contains both general and specific information.
1. Invoice number - all valid e-invoices in Egypt must have an invoice number used to identify, trace and retrieve them among thousands of other invoices. Both the seller and the tax authority can issue an invoice number following a specific sequence.
2. Date of issuance - you must state the date and time of a transaction on an e-invoice. Otherwise, it is invalid.
3. Taxation information - all e-invoices issued on all taxable transactions in Egypt must reflect tax information. It includes your name, address, and tax registration number.
4. Buyer's information - your organization’s e-invoice must also show information like your buyer's name and address to comply with the e-invoice regulation in Egypt. You can also add the buyer's tax registration number If they have one.
5. Transaction description - valid e-invoice in Egypt also shows a detailed description of the goods or services provided. For example, the type of service offered, the name of the product purchased, the amount paid, and the applicable tax rate.
1. Unified Standard Code (USC) - valid e-invoice must contain a USC issued by the tax authority in Egypt on a transaction of goods and services.
2. Buyer's Identity Number - e-invoice must show the buyer's ID number so that you can efficiently resolve disputes. If, for example, the value of the invoice exceeds the agreed amount, you can quickly identify the buyer with their ID.
3. Company's business code - your company's business code must reflect on your e-invoice. In addition, the registration code of the branch of your company where the e-invoice is issued (if applicable)
To whom does mandatory e-invoicing apply in Egypt?
The mandatory electronic invoicing applies to all companies in Egypt selling goods and services that are subject to VAT.
The Egyptian Tax Authority has decided to implement the e-Invoice mandate in phases according to a company’s invoice volumes. The government will announce which companies must comply through the publication of official decrees.
How does e-invoicing work in Egypt?
E-invoicing in Egypt involves a buyer, a seller, and the tax authority to generate digital proof of sales transactions. The e-invoicing interaction takes place on an e-invoicing software system. But, depending on the type of ERP software your company adopts, the process usually is the same.
If your company does not have an ERP system, you will have to register on Egypt’s e-invoicing SDK portal.
The SDK portal is equipped with system integration and APIs that notify taxpayers and tax authorities of events concerning the management of invoices.
If your company has an ERP, you need to integrate it with Egypt’s e-invoicing SDK in compliance with the e-invoicing regulation.
To do that, you need first to set up a digital taxpayers’ identity so that your company profile is discoverable on the SDK directory.
The tax authority will send you an invitation to become an administrator. Accepting the invitation allows you also to share admin control with other company representatives.
From there, you can begin generating and exchanging APIs and system credentials between your ERP and Egypt's e-invoicing SDK.
This process is time-consuming and may cost more than you anticipate if an expert does not handle it.
Our e-invoicing solution at Storecove is certified. It has helped many B2B and B2G companies worldwide comply with e-invoicing regulations.
Egyptian electronic invoicing requirements
Electronic invoicing in Egypt requires all companies trading taxable goods or services to register in the country’s electronic invoicing system.
Other requirements for complying with the e-invoicing regulation in Egypt include:
- The format of the electronic invoice is JSON or XML.
- All invoices have a Unique ID (UUID) code.
- The statement of products or goods is written in codes according to the GPC classification of the GS1 standard
- All affected companies nominate a representative to manage the company's e-invoicing system.
Why did the Egyptian government implement e-invoicing?
E-invoicing is part of the Egyptian government’s mission to rank among the top 30 countries in GDP, human capital development, and anti-corruption by 2030.
E-invoicing is an effective way to fight tax evasion and encourage accountability among companies and government agencies.
The mandatory requirement for electronic invoicing will benefit the Egyptian government and companies immensely in the following ways:
Simplify tax-paying experience
The electronic management of invoices will streamline the process of auditing and compliance checks involved in tax management. It also makes it easy to verify taxpayers’ credentials, VAT declarations, and transaction statements.
As a result, taxpayers and the ETA will enjoy an improved taxpaying experience and reduce the workforce required in the workplace.
Promote a green and sustainable economy
Implementing digital invoicing in Egypt will significantly reduce the use of paper in the country. Consequently, the government of Egypt will be promoting a green and sustainable workplace.
E-invoicing facilitates effective decision-making.
With e-invoicing, companies in Egypt can start extracting and analyzing accurate data about their business and customers. Effective decision-making will help companies to improve economic activities in Egypt and, therefore, increase their GDP.
Promote financial literacy
Using electronic invoices in Egypt is an avenue for the Egyptian government to bring its informal economic community into the fold. In effect, the government will also effectively promote increased tax justice in the informal sector.
Staying compliant with e-invoicing regulations in Egypt
Egypt’s invoicing system is a way for the country to make massive steps toward development. For this reason, the government has made the system mandatory for all companies in Egypt selling goods and services.
Storecove its e-invoicing solution is designed to help B2B, B2C, and B2G enterprises in Egypt comply with the country's e-invoicing regulations. It offers a solution that allows global connectivity while supporting all invoice formats.
More information about e-invoicing regulations in Egypt?
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