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Wednesday, 13 April 2022

E-receipt system pilot to kick off 15 April + official rollout set for 1 July

E-receipt system pilot to kick off 15 April: The Finance Ministry will launch a pilot of its e-receipt system for business-to-consumer (B2C) transactions this Friday, 15 April, it said in a statement yesterday. The trial period will last for 11 weeks until 1 July when the system will be officially rolled out, it said.

What’s this all about? The taxman wants the ability to track back and validate any sale a retail business makes to a customer. Imagine, for example, a shopper at your Friendly Neighborhood Supermarket buying an EGP 500 basket of goods. With the e-receipt system, the details of the transaction would be captured in real time by the taxman from the point of sale. That would make it impossible for Friendly Neighborhood Supermarket’s owner to hide revenue from the Tax Authority by keeping two sets of books: one with 100% of sales and expenses for his / her own use, and the other for government consumption with, say, 85% of sales and 100% of expenses.

How it works: Sales data controllers will be installed in all payment processing systems used by retailers and wholesalers to monitor and record all tax-relevant transactions. A state contractor — which has not yet been contracted, we’re told — will provide retailers with POS machines and will be responsible for activating and monitoring them and providing technical support. The e-receipts will also be encoded with QR codes that allow tax officials to verify their validity.

Who’s involved: Some 100 taxpayers from a variety of sectors will be involved in the pilot, Mohamed Keshk, who heads an internal audit department at the Tax Authority’s large taxpayers division, told us yesterday. He declined to name names, but did say that two of consumer electronics giant El Araby’s subsidiaries are involved in the program.

E-receipts won’t be issued from the get-go: During the first month of the pilot, sales data controllers will be distributed and retailers will receive training on how to use the system, says Keshk. By mid-May, we can expect to see the first e-receipts being rolled out, he added.

Wasn’t this supposed to start two weeks ago? We had reported that the pilot would kick off on 1 April, but Keshk told us yesterday that the beginning of April marked the end of the authority’s preparations, rather than the start date for the pilot.

What’s the plan for the official rollout? Companies with the largest sales volumes will be the first to be onboarded to the system in July, before it is rolled out to medium and small companies at a later stage, Keshk said. The ministry has not yet settled on a timeline for the full rollout, he added.

The system is being implemented by E-Tax, a subsidiary of EGX-listed fintech player e-Finance.

BACKGROUND: The new system complements the ongoing rollout of the wider e-invoicing program, and — in addition to cracking down on tax evasion — aims to help the Tax Authority reduce the size of the informal economy. It could also shore up consumer rights, since purchasers will no longer have to keep hold of paper receipts if they end up deciding to return items, FinMin has said.

Current state of the e-invoicing rollout: Over 52k companies have so far registered on the system and have sent some 154 mn e-invoices, according to the statement. The system had detected over 17k cases of tax evasion — clawing back more than EGP 6 bn for the treasury — as of the end of 1Q, officials said previously.

Where this came from: The Tax Authority launched a pilot for the B2B e-invoicing program with 134 companies in late 2020, before extending the system to all large taxpayers last July. All B2B invoices issued by businesses based in the Greater Cairo Area will be automated by June, director of taxpayer services at the Tax Authority Mohsen El Gayar recently told Enterprise, while all B2B and B2C invoices across the country should be fully automated by December.

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