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The Egyptian Tax Authority had announced earlier that self-employed professionals are obliged to register in the e-invoice system. But this did not sit well with several syndicates.
As a result, Egyptian Minister of Finance Mohamed Maait directed the Egyptian Tax Authority (ETA) to extend the deadline for all single entities to register in the e-invoice system to April 30th, 2023, instead of December 15th, 2022.
Doctors, engineers, and lawyers syndicates took to the streets, protesting the extension amid a divide in their opinions with some supporting the decision and some opposing it.
The finance ministry said it extended the deadline in order to cater to the syndicates’ demands and study their concerns, while ensuring an overall simpler registration process.
Joint committees will be formed by the ETA and different targeted segments, including members of professional syndicates, the ministry said, with the aim to study and facilitate all the obstacles facing targeted segments in the e-invoice system.
The minister also urged the authority to maximize efforts in raising awareness of single entities on the e-invoice system and different segments until the end of April 2023.
But what is the new tax e-invoice system in the first place and why are some of the syndicates opposing it? To begin with, it is a standard digital document recognized by the ETA used to prove the sale of various goods and services. Each document includes an electronic signature to validate the identity of the site to prevent counterfeiting and to ensure security and privacy.
The new system obliges all companies registered for value-added tax (VAT) and selling taxable goods or services to register and submit electronic invoices on the ETA’s online portal.
The registeration aims to achieve tax justice, curb tax evasion, and integrate informal economy into mainstream or formal economy, according to the ministry.
Lawyer Mohamed Reda told BBC on December 15th “I cannot imagine that there will be a single entity addressing all syndicates in Egypt, without inviting these syndicates to an open dialogue on the mechanisms of implementing the law before applying it.”
Reda sees that the law has some holes that need to be attended to. For instance, if a client hires a lawyer but then the lawyer or the client backs away from the case, would the tax be paid nonetheless or is there an option to redeem your money, including the tax?
The new law clashes with an older one that stipulates that there are six domains that are not subject to tax, including doctors, lawyers, engineers and journalists. “Has this been considered or will it be amended?” Reda asks
Economic expert Ali Eledreesy says that this is all part of digital transformation, which no one opposes in its essence; it is just a matter of how it along with its legal framework get applied.
Mokhtar Tawfik, Head of the ETA, said in a press statement that tax payers could receive the necessary technical support to ease their registration process in the e-invoice system through affiliated support centers.
Speaking on the expected returns of the system, Eledreesy said that tax proceeds amount to EGP 1 trillion and it should be doubled with the new system.
He also mentioned that the model has been applied around the world in developed countries. Thus, it is the only way forward, he said.
We are not against the system by any means, Reda assured; “We just have legitimate demands.”
As the syndicates continue to voice their concerns, the ETA ensures that it will act accordingly. The extension period has been made for that particular reason.
