Currently, the Egyptian Tax Authority and Ministry of Finance are updating the software they use to handle and process tax data. The introduction of Egypt electronic invoicing is one of the most crucial aspects of this total transformation. One of the main goals of the ETA Reform Program is to provide a single solution that enables the Egyptian Tax Authority to collect tax payments electronically (ETA)to track all business-to-business transactions (B2B) via the direct transmission of invoice data in digital format.
Starting with the B2B invoices, a new e-invoicing infrastructure will allow the digital capture of invoices moving in the nation (B2C). Government Ministerial Decision (188) for 2020 mandated the eInvoice system for all taxpayers.
Electronic invoice overview
The “electronic invoice” or “ Egypt electronic invoicing” is not necessarily a new concept, but some confusion still surrounds what exactly falls into this definition. Here we answer some questions regarding the term and look at the benefits of genuine e-invoicing compared to other commonly used invoice types.
What is an e-invoice?
An electronic invoice like Egypt electronic invoicing (e-invoice) is an invoice that is issued, transmitted, received, processed, and stored electronically using specific document formats. E-invoices are digital throughout the entire document life cycle, from issuance to archiving.
E-invoicing solutions can help replace manual tasks with automated business rules and actions to increase efficiency, minimize error handling, and help businesses comply with e-invoicing legislation.
What is not considered an e-invoice?
Not all digital invoices are e-invoices, despite the fact that numerous widely recognized e-invoice forms already exist. The following are two examples of bills that should be avoided:
E-invoices aren’t the same as PDF invoices, which are often delivered as attachments in emails. In addition, since PDF invoices are not supplied in a structured manner, they cannot be processed automatically.
Paper invoices are not e-invoices even if they are converted to digital format, since they were not issued electronically in the first place.
What are the advantages of e-invoicing?
Where did all of the money come from? When done correctly, Egypt electronic invoicing provides you with the perspective and knowledge necessary to reduce expenses and increase profit margins in ways traditional PDF and paper-based invoicing cannot. The following are some of the benefits of electronic invoicing that contribute to a good return on investment, long-term savings, and improved company in general:
- Operation without physical contact: E-invoicing facilitates the automation of time-consuming and error-prone procedures like data input, matching, and approvals, freeing up employees for more worthwhile projects.
- Improved cash flow and decreased days sales outstanding: Eliminating paperwork and manual chores may often reduce your day’s sales, particularly by several days.
- Exchange of documents and data in a secure manner: Secure file transmission, digital signatures, and secure networks contribute to e-invoicing being the safest method of sending and receiving invoices. Additionally, there is no chance of invoices being lost in the mail or being routed to spam email.
- Egypt electronic invoicing helps better Delivery and processing in real-time: On cloud-based systems or directly from your ERP, you may monitor documents’ delivery and processing status in real-time.
- High-quality data: E-invoicing enables you to access and analyze line-level data, which helps you expand your company by making more informed financial and procurement choices.
- Accurate invoices: Automated invoice validation and enrichment guarantee that your ERP system receives precise only transactional data. Fewer inconsistencies translate into faster cycle times and improved business relationships.
- Tracking and traceability: E-invoicing records transaction history and the whole document route automatically, saving you time by eliminating the need to track them manually.
- Environmentally friendly: Electronic invoicing not only help you reduce paper use and CO2 emissions; it also decreases operational expenses, increases profitability, and establishes a clear, trustworthy brand image.
- Adhere to legal requirements: E-invoicing via the appropriate service provider keeps you current and in compliance with B2B and B2G tax and archiving rules.
- Remote work capability: Electronic invoicing chores may be accomplished from any location without additional resources like printers, scanners, or the postal service.
Is now the right time to start e-invoicing?
Yes! There are various reasons why you should include an Egypt electronic invoicing strategy into your digital transformation plan immediately:
Legal and commercial demand: Now that several countries have enacted required e-invoicing legislation, others are likely to follow suit. Your nation may be next, therefore it’s prudent to begin preparations now.
Private businesses are also fast recognizing the benefits of electronic invoicing. Sending and receiving electronic papers demonstrates that your firm is progressive and prepared to use all digital possibilities.
Employment creation and adaptability: Automation creates more chances for employees than it eliminates. It enables businesses to develop new skill-based positions, evolve old ones, and manage operations in-house rather than relying on third-party resources. Additionally, it is critical to establish nimble, inventive services that are not harmed by distant work circumstances.
How to sign up for an e-invoice?
The following circumstances affect how taxpayers register with the Egypt electronic invoicing:
Taxpayers without an ERP system must register on the E-Invoice Portal. Only businesses without an ERP system can register with the E-Invoicing Portal. The Egyptian Tax Authority’s website has a comprehensive tutorial on writing for the E-Invoice Portal.
E-Invoicing requirements in Egypt
Taxpayers who use an ERP system must integrate it with the E-Invoice system by the Egyptian Tax Authority’s technical standards.
What is the structure of an e-invoice?
The electronic invoice is the standard in all companies that use modern technologies to handle their transactions. The information on this document comes from a database and can be sent by email, fax, or other means of communication such as printable documents. These invoices are usually used for financial purposes, but they also serve many different uses, including storage and sharing data with third parties when necessary.
This is useful for small companies to be organized and efficient in delivering their expenses that are completed several times of the year.
E-invoice features include:
- It contains detailed information and has a defined topic.
- E-signature technology must be used to prepare and sign it, and it must be legitimate.
- After examining and authorizing the e-invoice, the Tax Authority will grant it a unique identification number.. As soon as the e-invoice has been examined and authorized, the Tax Authority will assign it a unique identification number.
- The seller may withdraw it within a period defined by the Tax Authority, provided that the buyer has given their consent to the cancellation.
- The buyer has the right to reject the offer within a time limit that the Tax Authority will decide.
Invoice Reference Number (IRN)
Invoices may now be recognized by a unique Invoice Reference Number (IRN) provided by the Invoice Registration Portal upon validation (IRP). The IRP will produce a QR code, sign the e-invoice, and send it to the supplier after confirming it. These aspects contribute to an invoice’s unique identity. Tax authorities may readily trace these papers using this information via an offline program, even if they are not connected to the internet. Keeping the broader picture in mind, this e-invoicing concept was implemented into the Indian tax framework to combat tax evasion.
The IRN may be described as a unique number produced for invoices by the Invoice Registration Portal (IRP) and calculated using a hash technique under the new e-invoicing system. This step guarantees that the same document is not submitted more than once within the fiscal year.