Navigating New Tax Regulations for Digital Services in Egypt
Introduction
In light of recent updates, businesses operating in the Egyptian market are now required to validate both the Tax Registration Number (TRN) and the Unique Identification Number (UIN) of their B2B buyers. This is a crucial step for the correct application of the reverse charge VAT mechanism. Furthermore, non-resident vendors offering digital or remote services in Egypt must ensure they are registered with the Egyptian Tax Authority to maintain compliance and smooth business operations.
Simplifying the Registration Process
The Egyptian Tax Authority's e-Commerce Tax Unit has rolled out instructional video guides to simplify the registration process for non-resident vendors. These guides aim to help vendors efficiently navigate through:
- How to create an account on ETA website
- How to register under the simplified vendor registration regime
API Verification System Access
To comply with the new validation requirements, accessing an API verification system is necessary. Non-resident vendors can obtain access credentials from the ETA. The Fonoa team can assist you with the steps required and seamlessly integrate the automatic verification to your systems. Get in touch with our experts today to learn more!
Acquiring UINs for Egyptian Businesses
With the UIN being a new requirement, the ETA has provided detailed guidance to help local businesses acquire their UINs via its web portal. Non-resident vendors should direct their Egyptian clients to these guides to ensure timely compliance with the validation requirements before November 1, crucial for applying the VAT reverse charge mechanism. The ETA published detailed guides in both English and Arabic.
UIN Validity and Management
It's important to note that UINs have a one-year validity. The ETA's API service will include the UIN expiry date upon verification, aiding vendors in strategically managing transactions. Regular revalidation of the TRN+UIN pairs is advised, as UINs can be reissued throughout the year and must be renewed every year.
Consequences of Non-compliance
Failure to validate a B2B buyer's TRN+UIN will result in the transaction being treated as B2C, necessitating the charge of a 14% VAT. This could lead to non-resident vendors needing to register for VAT in Egypt upon crossing the EGP 500,000 turnover threshold and potential dissatisfaction among Egyptian B2B buyers.
Additionally, non-compliance may attract penalties and be treated as a criminal offence under VAT law.
How can Fonoa help?
Fonoa offers fully automated tax ID validation solutions for global businesses in more than a 110 countries. Get in touch with our team of experts today to learn more about best practices and country-specific tax ID validation information.
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