Advisor to the head of the tax office reveals the “money” that the electronic system has achieved

Where did the file on the mechanization of the Tax Administration arrive and what are the remaining steps and its impact on the interested parties, whether it is the financier or the state?… Numerous questions asked by “Al-Mal” during the interview with Saeed Fouad, advisor to the head of the Tax Administration , about the system to which the Ministry of Finance has been paying great attention and focus for several years.

Fouad elaborated on the system, its key role in eliminating tax evasion, the accurate count of the tax community and its end date.

Changes to the law on income tax, tax on private classrooms and the law on overstaying and additional tax were also touched upon.

He said that the process of the digital transformation of the Tax Administration was based on several axes that include application, electronic invoice, as well as electronic invoice, noting that the entire system of electronic applications, which includes the calculation of value added tax and income, has been completed since the beginning of 2021. There are no paper applications.

He explained that the Government then implemented a system of electronic invoices through which business between companies is monitored.

It included 8 phases, starting with companies subject to the Central Audit Organization in October 2018, followed by 3,000 large companies at the center of financiers in two phases.

Then we moved on to capital companies in Cairo, Alexandria and Luxor (joint stock companies and investment companies), then the last stage, which is the other legal companies in the republic, which will have to issue an electronic invoice from December 15, 2022.

He added that all legal companies outside of the greater Cairo area can submit their tax invoices in paper form during this period, with the fact that they are binding electronically from the middle of next month, and will also give them a period for experimentation and compatibility with the new system. until the beginning of March 2023, then the electronic invoice becomes binding for everyone at the beginning of April. Also, emphasizing that after the passing of that date, paper invoices from companies will no longer be accepted, and they cannot do business with any government bodies.

He continued by saying: In parallel, work began on the electronic invoice system that monitors the movement of transactions between the merchant and the end consumer, noting that companies that have entered the electronic invoice system are authorized to issue electronic invoices. , which helps to limit the tax community for liberal professions such as doctors, lawyers and engineers and artists, along with small retailers and chain stores in shopping centers, provided that this system ceases to operate in early 2025.

Fouad enumerated the advantages of the system of invoices and electronic invoices for the taxpayer, as it is easier for him to submit the VAT return, since all sales documents are uploaded to the system in real time, so it is easier to prepare the tax return at the end of each month, as and reporting income tax at the end of the year. In addition to facilitating the online tax verification process without disrupting the work of the taxpayer, it also enables the Tax Authority to limit the tax community, include the gray economy and achieve tax justice.

He continued that a natural person’s tax return for the Gregorian year is submitted from the beginning of January to the end of March every year, while a legal person submits a tax return according to their wishes, either for the Gregorian year. .

Saeed emphasized that the electronic system will play a key role in controlling the difference in commodity prices among traders, by merging the informal economy with the formal economy to achieve tax fairness, which is one of the most important goals of the system, given that the electronic invoice will eliminate a large percentage of tax evasion, given that the field for evasion will be very narrow, in light of all the documents being tracked electronically.

He added: “Tax evasion is a global phenomenon and will not be completely eliminated due to the practices of some companies that can manipulate and exploit legal loopholes, such as the company’s non-obligation to supply state-owned enterprises and produce its goods by itself and deal directly with the end consumer in cash, and this is where the role of tax evasion campaigns comes in to control these illegal practices.

Amendments to the law

“Fouad” said that “taxes” from time to time review tax laws according to market conditions and variables with the aim of bringing positive changes that are compatible with development, which he proves by referring to the development of takeover laws. late fee and additional tax to relieve taxpayers as a result of the conditions of the Russian-Ukrainian war. And its consequences on the movement of trade, import and export on a global level, and the impact on the global and local economy, and the subsequent failure of financiers.

It is important to note that the Deferral Fee and Additional Tax Bypass Act issued last August allows a taxpayer or taxpayer to benefit from an excess of 65% of the Deferral Fee and Additional Tax prescribed in each of the Stamp Duty Acts. , the Law on Fees for the Development of State Financial Resources, the Law on Income Tax and the Law on General Sales Tax and the Law on Value Added Tax, provided that the remaining 35%, which has not been exceeded, is paid within a period not exceeding the first of the following March, in the event that the original tax debt or the due fee or duty was paid before the date of entry into force of this law or by the date of August 31, 2022, regardless of the reason for the execution of the obligation.

He pointed out that the law on bypassing the late fee is not an absolute law, but is approved only 3 times under certain circumstances, in 2018 for a period of 6 months, and in 2020 for a similar period, and the current year, and indicated that the adoption of the law again comes based on the decision of the Council of Ministers.

He pointed out that the amendments to the Income Tax Act, which are currently in parliament, propose an increase in the tax exemption limit to £30,000 per year, which means that an employee who earns £2,500 a month is completely tax-exempt, and above £30,000 up to £45,000. £2.5% tax will apply, equivalent to £375 per year.

In terms of reconsidering recent changes to the law following the government’s decision to raise the minimum wage to £3,000, and its request for the exemption limit to be £36,000 per year, “Fouad” said the House of Representatives has the right to change the exemption limit to £36,000 in line with new needs and variables in order to keep pace with recently issued decisions, until the law is finally approved or signed by the President of the Republic and published in the Official Gazette.

He emphasized that the tax approach that the state will adhere to in the next five years is that it will not implement any tax increases, as evidenced by the passing of the current Value Added Tax Law at the end of the year, which abolished the value added tax on a large number of goods, including requirements for the production of medicines and fertilizers, in order to reduce the burden on financiers.

Legalization of posts and taxes on bloggers

Regarding the legalization of private tutoring centers, according to the recent announcement of the Minister of Education about this step, Fouad said that it will contribute to limiting the tax community through the coordination between the ministry and the authorities by providing the center data.

He pointed out that there are centers that have not harmonized their conditions, and the competent body is already collecting tax from them, especially since the data that the body will receive from the ministry will help it in performing its duties.

He revealed that there is coordination with the Ministry of Education regarding the data of schools and colleges in order to facilitate the collection of taxes from these bodies, and that the legalization of the centers will be an addition to the continuous cooperation of the two parties.

Egypt’s tax authority earlier appealed to owners of private tutoring centers to open tax files and register with authorities to legalize their status.

Regarding taxes on e-content producers, he pointed out that they are responsible according to the Income Tax Act, noting that a special unit for e-commerce was established in the Tax Administration, whose mission is to limit the tax community.