What is an electronic invoice in Egypt? (Comprehensive Guide 2024)

Transactions take place between them, including issuing, receiving, and canceling invoices, as well as amending invoices.

Benefits of Implementing the Electronic Invoice System

Benefits to the Tax Authority of Implementing the Electronic Invoice in Egypt

• Ease of monitoring all financial transactions between companies.
• Developing methods of exchanging invoices from a paper/manual system to an electronic system.
• Knowing the sales value of a specific product in a specific sector and knowing the value of profits from it at the state level due to the unification of the code used.
• Easy access to transaction data.
• Reducing commercial fraud.
• Ease of tax monitoring by the authority on all commercial establishments.

Benefits to Businesses of Implementing Electronic Invoicing in Egypt

• Enhanced Tax Compliance: Businesses using electronic invoicing are perceived as lower tax risk entities.
• Reduced Administrative Burden: All transactions are directly accessible to the tax authorities, minimizing administrative tasks.
• Simplified Verification: Verification of recorded, issued, and received invoices is made easier.
• Facilitated Reporting and Analysis: Businesses can effortlessly generate reports and conduct in-depth analyses of their financial performance.
• Streamlined VAT Reconciliation: Inter-company VAT reconciliation processes are simplified.

What Does an Electronic Invoice Look Like?

The appearance of an electronic invoice can vary from one accounting system to another. However, it generally doesn’t differ significantly from a traditional paper invoice. The only requirement is that it contains the information mandated by the Egyptian tax authorities. There’s no strict adherence to specific formats or designs.

Mandatory Decisions for Implementing Electronic Invoicing in Egypt for Companies to Date

1. Decision No. 386 of 2020: Mandating 134 companies to join the first phase of the electronic invoicing system.
2. Decision No. 518 of 2020: Mandating 347 companies to join the second phase.
3. Decision No. 85 of 2021: Mandating the third phase of electronic invoicing, requiring all registered large taxpayers to start using electronic invoices by 15/5/2021.
4. Decision (195) – 2021: Mandating the medium-sized taxpayers center and major freelancers.
5. Decision (443) – 2021: Mandating the fifth phase of electronic invoicing.
6. Decision No. (619) of 2021: Mandating the sixth phase of electronic invoicing.

Companies Obligated to Implement the Electronic Invoice System in Egypt

The companies mentioned in the decisions are obligated to implement the system, and any company can join the system without being mentioned, in preparation for electronic transactions. By the end of 2022, all companies and institutions will be included in the system. Now, we will answer the most common question:

How do I register in the electronic invoice system in Egypt?

First: To register in the electronic invoice system in Egypt, the employer goes to the tax authority in his location and brings the following documents:

Original national ID card/passport and a copy of each The company’s commercial register Value-added tax registration card Authorization letter from the company The authorization letter should specify the following:

Company Information: (Company phone number/ Company address/ Company registration number/ Company email) Authorized Representative Information: (Name in Arabic and English/ National ID number/ Email/ Contact number)

In the case of an authorized representative attending on behalf of the company owner: All the previous documents must be submitted along with the original and a copy of the valid power of attorney. The company owner shall submit the documents to the tax authority employee. If some documents are missing, a request for completion of documents shall be prepared, and an email or other means of communication shall be provided for sending them.

Secondly, the tax authority employee shall collect the documents from the taxpayer, record the data, and create a digital file for the taxpayer.

Thirdly, an invitation to register in the electronic invoicing system shall be sent to the taxpayer’s email. The authorized representative or company manager shall complete the digital file with the following data: (Name in Arabic and English/ Contact numbers/ Set password). A comprehensive guide to the system shall be prepared, including a definition of the system, its components, and support channels, and shall be sent to the taxpayer.

Fourthly, after completing the registration process in the system, several notifications shall be set up. These notifications are sent by the system to determine the method of sending notifications to the company in case of issuing invoices and to specify the type of invoices for which notifications are to be sent (invoices/purchases) or both. Invoices shall be issued, and within 3 days, the company must review them to verify their data before approval by the authority. They can be modified or canceled within 3 days.

Components of an Egyptian Electronic Invoice

The components of an electronic invoice in Egypt include essential data that must be included in the invoice. This data is considered indispensable and includes:

• Unique Invoice Identifier (UUID): A unique code assigned to each invoice.
• Electronic Signature or Seal: A digital signature to verify the invoice’s authenticity.
• Electronic Invoice Data: Detailed information about the invoice, such as the buyer, seller, items, quantities, and amounts.
• Standard Product and Service Codes: Codes that standardize the classification of goods and services.

SDK (Software Development Kit)

An SDK is a document sent by the tax authority to an organization after registration. It contains all the technical and procedural details required for integration with the system for companies using an ERP system. Companies issuing less than 200 invoices per month can use the system’s portal directly. However, companies issuing more than 200 invoices per month must integrate with an ERP program or other systems.

Working with the System’s Portal

The system offers the following options:

• Assigning Delegates and Users: Defining the roles and permissions of accountants, managers, and other users, along with setting expiration dates.
• Inviting Users: Sending invitations to other users to join the system.
• Adding Branches: Adding multiple branches of the organization to the system.
• ERP System Integration: Enabling integration with an ERP system and setting a time limit for the connection between the system and the ERP. The data is then sent to the company responsible for integrating the systems.

Is there a fine for not registering in the electronic invoicing system?

Yes, since December 20, 2022, penalties have been imposed on taxpayers who fail to comply with the electronic invoicing system. These penalties range from 20,000 to 100,000 Egyptian pounds. Penalties were further tightened starting from April 1, 2023. If a taxpayer does not issue their invoices electronically, their income tax will not be recognized, and they will not be refunded the value-added tax. Therefore, compliance with the electronic invoicing system has become mandatory to avoid penalties and the loss of certain tax benefits.

How does the Al-Badr software simplify your business operations through integration with Egypt’s electronic invoicing system?

Can the Al-Badr daily sales software, as a sales and cash register system, be integrated with Egypt’s electronic invoicing system? The answer is yes, you can connect to Egypt’s electronic invoicing system using the Al-Badr software and continue your business with complete confidence. Integration with a sales system for interacting with Egypt’s electronic system: The system allows for integration with a sales system through the Application Programming Interface (API), facilitating the issuance of invoices and interaction with the system quickly without the need for redundant data entry.

But how does Al-Badr facilitate this process?

Al-Badr is a cloud-based accounting system that is considered one of the leading solutions for certified electronic invoicing. With years of experience and successful implementations with hundreds of companies across various sectors, Al-Badr offers excellent support to help you smoothly transition to electronic invoicing. It supports integration with the tax authority and provides advanced features such as invoice issuance, management of discounts and surcharges, and report generation. You can access all these features through the Al-Badr application or by using the system on your computer, allowing you to experience seamless integration between accounting, inventory, customer management, and employee management systems, all through a single user-friendly interface.

Al-Badr’s daily sales program enables integration with Egypt’s electronic invoice system using the Application Programming Interface (API).

You can watch the following video to learn more about the components of Al-Badr’s daily sales program.