Navigating the global tax compliance landscape successfully is complex and resource-intensive. Every country has a specific and constantly evolving set of legislated e-invoicing requirements.
Non-compliance, intentional or not, can result in significant financial penalties, business disruption, and reputational damage.
Mandatory e-invoicing in Egypt is rolling out in phases as planned, currently the e-invoice project is at the 4th phase where it’s mandatory for large Egyptian taxpayers to use e-invoicing. Note that from January 2022, the mandate will be effective for ALL taxpayers operating in Egypt and VAT can no longer be deducted from paper invoices.
Egypt operates this e-invoice mandate with a so called “clearance model”, meaning that each e-invoice must be validated and approved by ETA (Egyptian Tax Authority) before it is sent to the customer. Taxpayers are obliged to acquire a HSM (Hardware Security Model) device or a USB token to digitally sign the e-invoice. In addition, Product codes must be added on the e-invoice according to the GPC (Global Product Classification) classification of the GS1 (Global Standards 1) standard.
The Egyptian Tax Authority kicked off the fourth phase of the electronic tax invoicing system’s implementation. Companies registered at the Medium Taxpayers Center in Cairo and the Large Taxpayers Center of the Free Profession are required to issue electronic invoices after the grace period of 4 months, due date Sep 15th 2021. These businesses will have to adhere to the terms and conditions set out by the Egyptian Tax Authority, which includes the issuance of the electronic signature certificate, the usage of a certain coding system, etc.
The e-invoicing system is fully applied as from mid of May 2021 for all the taxpayers who are relevant to the Large Taxpayer Center Department.
This is in line with the Egyptian goal to have e-invoicing completely implemented as of 1 January 2022, which is part of the government’s digital plans.
Decree No.125 of 2021 was published by the Egyptian Ministry of Finance. As a result of this decree, businesses will not be able to deduct VAT on a paper invoice, unless the supplier is not yet required to apply e-invoicing at the time of supply as from January 2022.
The Minister of Finance Mohamed Maait announced on 3 March 2021 that registered taxpayers in Egypt who wish to join the e-invoicing system are able to do so until 15 May 2021.
The e-invoicing system should allow the Egyptian tax authorities to follow up all commercial transactions between companies, as the data of all invoices will be exchanged digitally and instantly. The Minister hopes e-invoicing can help eliminate the informal economy of Egypt.
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