Companies Registered In Egypt Will Have To File Taxes Electronically Starting 2020

The Egyptian Ministry of Finance has just amended the executive regulations of the Income Tax Act, making it mandatory for companies to file their taxes online starting from January 2020. The enforcement of the electronic invoice draft law prepared by the Ministry shall bring forward many positive economic effects. It will help in establishing an accurate database for all commercial transactions executed in the Egyptian markets. This shall allow taxable community to be effectively detected and more VAT taxpayers to be registered, and hence improving VAT revenues.

Since October, 11.5 million electronic invoices, 770,000 VAT declaration have been submitted. Taxpayers can upload details of their own invoices through a simplified automated accounting tool, an Excel sheet or type them manually onto the program, the statement noted. In cooperation with an experienced international corporation, Ministry of Finance is currently working on to fully automate the system of tax declarations. VAT declaration shall be automatically filled via invoices, so as to trigger the first step of electronic invoices.

The new system of tax declarations shall also help in incorporating non-official economic sectors and in building a database capable of predicting income tax as a result of the precise inspection carried over taxpayers throughout the year.  It can also verify tax figures and national ID number in the submitted invoices through processing an automatic examination processing of files of purchases and sales invoices, so as to fulfill revision purposes before having them uploaded onto the system.  Moreover, the new system can detect mistakes in invoices and inform taxpayers therewith for their correction before sending them to the tax authority. Tax declaration system entails obligatory information such as: tax identification number, national ID number, name and domicile of vendor in the purchase invoice of the taxpayer.  Such information shall help in tightening control over invoices and reduce acts of submitting consolidated ones.

A new type of sales invoices has been added to the system that allows uploading of invoices of end consumers without the registration number (B2C), in a way to provide ID number for taxpayers whose transactions exceeded EGP 50,000 in value. New codes and classifications for tax table products have been added to enable limiting the trading of products such as tobacco.

The new electronic system allows the detection of taxpayers who submit zero-tax declarations and non-compliant ones in spite of their commercial transactions. It can also detect VAT non-registered taxpayers whose annual purchases exceeded VAT registration threshold. Moreover, true sales figures of taxpayers' invoices can be verified though matching them as per their declarations with purchases of others, and also by matching them with custom information. The system can also identify defaulters who don't comply with the legal date of submitting tax declarations, sales and purchases history of fake companies, and those who submit credited and debited tax files.

The Income Tax Authority requires that the system of electronic invoices be capable of processing an automatic examination of sales and purchases invoices, issuing a unique tax number for each invoice, saving and encrypting all related files of submitted invoices, presenting invoices in a readable format through taxpayers' account on the system, enabling electronic signature of the electronic invoice and validating the same.

Tax reform plan shall also include launching an application on mobile phones that allows entering invoices' figures, replying to frequently asked questions, inquiring about the enterprise status (VAT registered or not), and receiving news on VAT. The application shall be available on Apple and Google store by end of June.