Announcement of the mandatory use of e-bill
Breaking News: New Deadlines 2022
The e-invoicing obligation in Egypt already started in 2020 and has been extended in phases since then. Since July 2021, all large companies have been obliged to use electronic invoicing, or the B2G e-invoicing obligation applied from that point on. At the beginning of 2022, this obligation will be extended to all companies and Egypt will also introduce a B2B obligation.
VAT for food delivery services
The Egyptian tax authority plans to impose a VAT on domestic food delivery services. This standard VAT rate of 14% will apply to specialized food delivery services and restaurants. The previous threshold for VAT registration is E£500,000 per year. All service providers below this amount remain exempt from VAT.
In addition to this, a reduced rate of 5% also currently applies on certain equipment for businesses and non-VAT registered individuals. Furthermore, a special reduced rate also still applies to a number of basic products, known as table taxes. These include food at 5% and beverages at 8%.
You can only register for VAT in Egypt if you are a resident of the country and use an intermediary or agent to do so.
Egypt and the road to electronic invoicing
Currently, the Egyptian Tax Authority is identifying different models to introduce e-invoicing. In May 2019, a statement was published by the Egyptian Ministry of Finance to positively advance this process. On November 15, 2020, Egypt introduced e-invoicing in a test phase for selected, large companies. Later, the process will be extended to all VAT registered companies.
The government expects the e-Invoicing introduction to have many positive economic aspects, such as improving the VAT revenue situation. The introduction is also expected to have a positive impact on the creation of a database that will identify all commercial and taxable transactions and thus better predict likely tax revenues. In this regard, the tax authority defines what requirements must be placed on the e-Invoicing solution in the future.
The test phase now introduced is based on the Italian SdI e-Invoicing model, as the e-Invoices must contain a unique digital signature of the suppliers and a uniform code to identify the goods or services, and must be approved beforehand by the Egyptian tax authority. Egypt has now designated 134 identified companies for the test run, which must adhere to the new e-Invoicing requirements.
Who is affected by the e-Invoicing mandate?
All companies that are registered for VAT in Egypt and sell taxable goods or provide such services.
How does e-Invoicing work in Egypt?
Taxpayers first register with the tax authority, where they receive login credentials, API access, and the e-Real certificate. Sales invoices must be reported and validity confirmed by the taxpayer on a daily basis. The confirmation can be done via an authority portal or via a free mobile app.
Egyptian authorities have provided API interfaces and software development kits for companies to submit invoices via XML or JSON. The invoice contains the regular mandatory fields for transmission and the product descriptions must follow the “Global Product Classification System”.
How e-invoicing will proceed in Egypt remains exciting and the fine details of the e-invoicing requirements have yet to be worked out.
Egypt decided this year to fully introduce electronic invoicing. This measure was announced in March 2021 in the form of a mandate. The introduction of the electronic format will take place in steps:
1. Compliance phase with 134 companies
2. Compliance phase (new companies)
3. Compliance phase (new companies)
4. Phase: mandatory use of e-billing for all public companies
VAT is no longer deductible on paper invoices
Since July 2021, public sector companies, economic authorities, and government agencies must follow the e-invoicing mandate, in addition to other affected companies.
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