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Thursday, 23 September 2021

And so it begins…

A pilot program for B2C e-invoicing has kicked off: The Finance Ministry has announced the rollout of electronic invoicing for business-to-consumer transactions, marking a new phase of the government’s efforts to bring more Egyptian businesses into the formal economy and and make it more difficult to avoid giving the taxman his due.

Some 100 companies are taking part in a six-month trial phase during which they will need to record all transactions via a real-time electronic system, Finance Minister Mohamed Maait announced at a presser yesterday, kicking off a process that will eventually see all of the country’s B2C sales logged with the Tax Authority.

Say goodbye to the days of having two sets of books: All sales will be logged in a central database using sales data controller (SDC) devices installed in traders’ point-of-sale (POS) machines, enabling the Tax Authority to monitor and verify transactions. SDCs should be compatible with most POS machines used by retailers and service providers, meaning implementation should be relatively simple — and, of course, that your friendly neighborhood systems integrator is going to be laughing all the way to the bank.

Who’s on board? Among the 100 companies taking part in the pilot are consumer electronics giant El Araby, hypermarket Carrefour, retailer Awlad Ragab and auto distributor Kia. The government is in the process of distributing the devices to the participating companies, after which they will be expected to immediately begin logging transactions.

The timetable: Retailers will be the first companies to join the system followed by the services industry in a later phase, according to Maait. Hypermarkets, grocers, pharmacies and auto distributors will be included in the first phase, though e-commerce companies will be on-boarded at a later date. Unlike for B2B transactions, the ministry has not set any target dates for completion, and expects the process of integrating all shops, businesses, and service providers into the scheme to take years.

The idea is to cut down on tax evasion and integrate informal businesses into the formal economy, Maait said. The ministry believes the system could eventually double the government’s tax revenues from EGP 1 tn to around EGP 2 tn.

B2B e-invoicing is already well under way: All 2.8k of the country’s large taxpayers are now issuing e-invoices via the ministry’s digital tax platform, and they are set to be joined later this year by Cairo-based joint stock companies, investment companies, public sector businesses and government agencies. The ministry is expecting to have all of the country’s taxpayers filing B2B e-invoices for transactions by April 2023.

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