· Automation of tax declaration system supports electronic examination system and inspects cases of tax avoidance
· Thanks to the automated tax filing system, number of registered taxpayers amounted up to 267,000
· 11.5 million electronic invoices, 770,000 VAT declaration have been submitted since last October
Ministry of Finance has recently issued a statement noting that the enforcement of the electronic invoice draft law prepared by the Ministry shall bring forward many positive economic effects. Namely, it will help in establishing an accurate database for all commercial transactions executed in the Egyptian markets. This shall allow taxable community to be effectively detected and more VAT taxpayers to be registered, and hence improving VAT revenues. Thanks to having a large database of taxpayers' transactions, tax examination system will be improved and methods of financial policies will be more informed.
In cooperation with an experienced international corporation, Ministry of Finance is currently working on to fully automate the system of tax declarations. VAT declaration shall be automatically filled via invoices, so as to trigger the first step of electronic invoices.
Taxpayers can upload details of their own invoices through a simplified automated accounting tool, an Excel sheet or type them manually onto the program, the statement noted.
The new system of tax declarations shall also help in incorporating non-official economic sectors and in building a database capable of predicting income tax as a result of the precise inspection carried over taxpayers throughout the year. It can also verify tax figures and national identity number in the submitted invoices through processing an automatic examination processing of files of purchases and sales invoices, so as to fulfill revision purposes before having them uploaded onto the system. Moreover, the new system can detect mistakes in invoices and inform taxpayers therewith for their correction before sending them to the tax authority. Tax declaration system entails obligatory information such as: tax identification number, national ID number, name and domicile of vendor in the purchase invoice of the taxpayer. Such information shall help in tightening control over invoices and reduce acts of submitting consolidated ones, illustrated the statement.
Subject to the ministerial decree no. 623 for 2018, a new type of sales invoices has been added to the system that allows uploading of invoices of end consumers without the registration number (B2C), in a way to provide ID number for taxpayers whose transactions exceeded 50 thousands in value. New codes and classifications for tax table products have been added to enable limiting the trading of products such as tobacco.
Since its launch last October, the new automated tax system rendered positive impacts. Taxpayers are now obliged to electronically submit VAT declarations as of January 2019. Taxpayers registered in the electronic system reached 257,000 while 770,000 VAT declarations have been received up to date, and 11.5 million electronic invoices have been submitted (9 million sales invoices, 2.5 million purchase invoices and around 54,000 electronic tax income declarations)
As highlighted in the statement, electronic examination of invoices is one important factor towards boosting tax proceeds and increasing registered taxpayers. The said system allows the detection of taxpayers who submit zero-tax declarations and non-compliant ones in spite of their commercial transactions. It can also detect VAT non-registered taxpayers whose annual purchases exceeded VAT registration threshold. Moreover, true sales figures of taxpayers' invoices can be verified though matching them as per their declarations with purchases of others, and also by matching them with custom information. The system can also identify defaulters who don't comply with the legal date of submitting tax declarations, sales and purchases history of fake companies, and those who submit credited and debited tax files.
Tax Authority requires that the system of electronic invoices be capable of processing an automatic examination of sales and purchases invoices, issuing a unique tax number for each invoice, saving and encrypting all related files of submitted invoices, presenting invoices in a readable format through taxpayers' account on the system, enabling electronic signature of the electronic invoice and validating the same.
Tax reform plan shall also include launching an application on mobile phones that allows entering invoices' figures, replying to frequently asked questions, inquiring about the enterprise status (VAT registered or not), and receiving news on VAT. The application shall be available on Apple and Google store by end of next June, noted the statement.