EGYPT E-INVOICE UPDATE!

Egypt Is The First Country In Middle East and Africa To Implement E-Invoice

This practical manual on E-Invoice can be used as a quick reference guide (QRG) for those who are interested to have the know-how depend on their role, i.e. project managers, business stakeholders, finance managers or unit CFO's. This article is taking the circumstances of e-invoice implemented in Egypt, and it shall cover all aspects of the national project from registration to implementation.

What is E-Invoice, how it works, scope and why governments are implementing it?

E-Invoice simply is, amending the current paper-based exchange of invoices (sales/purchases) to be digital through a website (usually it is a governmental portal).

It works via configuring & mapping enterprise's ERP with E-Invoicing portal through API's (API is short for Application Programming Interface), in simple words, a bridge (see below screenshot).

E-Invoice scope varies from country to another depend on its regulation. In Egypt, it focuses on taxpayers AR side (i.e. sales invoices), because your sales is some other enterprise's purchases.

Governments started to implement E-Invoice for enormous reasons and perspectives, whether that state is developing or developed country, both are targeting on priority the reduction of tax avoidance or tax evasion cases, less administrative costs by taxing authorities, and on the other side, it's part of every government digital agenda, likewise Egypt 2030 vision. You can read more in this article why governments accelerating e-invoicing economy. Also, if you're interested to read a research paper on it by WorldBank, click here Paper on E-Invoice Compliance Aspect.

Egypt first sight of E-invoice regulation was back July 2020, and it is applicable on Large Tax Payers registered companies, while it maintained a phase basis implementation process. First wave went live was on Nov 15th 2020, and second wave went live on Feb 15th 2021. Noting that the final cut-off deadline for all LTPC (Large Tax Payers Center) companies whose name didn't come up yet is June 30th. It is noted that the implementing company of the E-invoicing portal is E-Finance company, which is the government's arm for digital technologies.

Egyptian enterprises' whose name has come up, shall accordingly follow the announced protocol to do the following steps:

• Registration: Online and manual registration with the ETA is required (i.e. through email and physical submission to LTPC)
• System configuration: Taxpayers' ERP has to be configured in a certain technical aspect in order to be mapped to E-Invoicing portal (note: there is not direct connection to taxpayer's ERP but a connection bridge to read the data). For Tech experts, follow this link.
• E-Seal Procurement: Taxpayers shall apply for E-seal device solution based on their volume capacity (i.e. how many invoices are being issued on daily/annual basis), there are two types mainly whether HSM or USB Token. Only certain companies are authorized from government to procure from, therefore you need special attention to that. E-Seal shall be used to electronically sign & encrypt the digital invoice providing QR-code & unique ID per invoice.
• Business Activity: Each enterprise shall - depending on their business activity (i.e. sales) - assign a correspondent material unique identifier code as globally recognized, whereas that unique identifier shall be showing parent class, item and brick details of the commodities each enterprise doing commercial activity in. Materials classifications are GS1 (most common class and it follows GS1 Org) and GPC. Once commodities are assigned to a proper GS1/GPC, communication and database update shall occur with GS1 organization and ETA.
• Last steps shall be the business scenarios & testing configuration on a pre-prod environment & once successfully done, taxpayers shall move it to Production environment on your ERP and E-Invoicing portal as well. At this point, exchange of sales invoices will be done automatically and verified from the E-invoicing tool within seconds.

It is recognized that there would be a lot of continuous improvements shall be required as you go, and also, taxpayers may leverage such technology use to apply a Change Management & utilize it within their organization to adapt with the new processes.

It is also noted that, export activities in Egypt is not yet connected to Customs authority, therefore the use of manual commercial invoices are still existing, but for how long?

It is expected within next 2-5 years, E-invoicing can be exchanged among different states (i.e. cross border exchange of E-Invoice).

Egypt was the first country to implement E-Invoicing in MEA region, and remainder countries is expecting to go-live by far end of 2021 (example, Saudi Arabia). If you want to explore the Ministry of Finance/Egyptian Tax Authority (ETA) link for E-invoice please click here.

Please feel free to connect if interested to discover more, or wants to comment.

Who's next on the countries' radar? Jordan, Saudi Arabia, United Arab Emirates and the list goes on.

Regards,

Abdelrahman Ali