E-invoicing in Egypt: the mandate and its effect on cost deduction

Executive summary

• The basis is Unified Tax Procedures Law No. 206 of 2020 (articles 35 and 37), its executive regulations issued by Ministerial Decision No. 286 of 2021, Ministerial Decision No. 188 of 2020 applying the electronic tax invoice system, and the decisions of the Head of the Egyptian Tax Authority (the ETA) setting the phases.
• The heavier consequence is often in the base, not the fine. Since July 2023 a cost is deductible for income tax only if supported by an electronic invoice, and input VAT is deducted only on an electronic invoice.
• Two systems, not one: the electronic invoice between taxpayers and between a taxpayer and a government body, and the electronic receipt between a taxpayer and a final consumer.
• The invoice mandate was rolled out in eight phases between 2020 and 2022, completed on 15 December 2022, since when every taxpayer registered with the ETA is obliged.
• Unified goods and services coding is a condition of a valid document.

The two systems

They are separate systems with their own decisions and phases. A business selling both to companies and to consumers issues electronic invoices to taxpayers, and moves its consumer sales to the electronic receipt once an e-receipt decision covers it.

The consequence that often outweighs the fine

Since July 2023 a cost is deductible for income tax only if supported by an electronic invoice, and since January 2025 by an electronic receipt where a receipt is the document (article 22(2) of the Income Tax Law as replaced by Law No. 30 of 2023). Costs not customarily documented, and costs the Minister exempts, are excepted. The ETA states that since 1 July 2023 input VAT is deducted or refunded only on electronic invoices.

The breach may therefore not stop at a sanction on the party in default; it can reach the base itself. A cost not supported by a valid electronic invoice is rejected on audit, which increases taxable profit, and the input VAT paid on it is not deductible, which increases the VAT payable.

And the consequence falls on the buyer, not only on the seller. A business buying from a supplier who is obliged to e-invoice but does not do so loses the cost deduction and the input VAT, even though it is itself compliant. Requiring the electronic invoice from a supplier is therefore a contractual condition, not an accounting step. A paper invoice fails where the supplier was obliged to e-invoice on the invoice's date.

The fine itself: breach of articles 35 (paragraphs 1 and 2) and 37 (paragraphs 1 and 4) carries a fine of EGP 20,000 to 100,000 (article 71 of Law No. 206 of 2020).

The phases of the invoice mandate

Issued by decisions of the Head of the ETA. These are the ones published on its site:

The fourth sub-phase of Decision No. 323 extended the obligation, from 15 December 2022, to every taxpayer registered with the ETA not covered by an earlier decision. The question now is from what date a business was obliged, which the ETA's online inquiry service shows.

Since 2022, electronic receipt decisions have followed in main phases and sub-phases set by Ministerial Decision No. 230 of 2022.

A related provision

The temporary tax card cannot be used to issue electronic invoices or receipts — under article 27 bis of the Unified Tax Procedures Law, added by Law No. 150 of 2026. A business being incorporated that holds one completes its formalities with it but cannot use it to trade where electronic invoicing is required. The detail is in Egypt's temporary tax card under Law No. 150.

Where it goes wrong in practice

The taxpayer's own data on the system. Legal name, tax registration number, address and activity code are set before issuing begins. Correcting them after a large number of invoices have gone out is expensive and calls for notes.

Goods and services codes. Unified coding is a condition of a valid document, and a coding error causes the system to mark it invalid. Every item in the accounting system needs its code mapped before issuing, not at the point of issue.

Rejected or cancelled invoices on the system are not posted to the books, and their correction is pursued with the supplier. Posting a rejected invoice creates a difference between the books and the system that surfaces on audit.

Credit and debit notes are a separate document type on the system, and must show the number and date of the original invoice and be linked to it.

Periodic reconciliation between the system and the books, in both directions: what was issued on the system and not posted, and what was posted and not issued. Run it monthly, not annually — a month's difference is corrected, a year's is argued.

The e-signature or e-seal certificate (the token) has an expiry date, and its expiry stops issuing. It belongs in the compliance calendar like any other renewal.

What this requires

• Confirm through the ETA's inquiry services the dates from which the business became obliged to issue electronic invoices and receipts.
• Make the electronic invoice a condition of contracting with suppliers, rather than asking for it at the point of posting.
• Set item codes and taxpayer data before issuing begins.
• Reconcile the system against the books monthly, in both directions.
• Record the token's expiry date among renewal deadlines.

The firm's Tax Department activates the system, sets up codes and data, runs the periodic reconciliation and deals with rejected documents.

Mahmoud Nassef — Chartered Accountant (Egyptian Register), Founder Partner

Member, Egyptian Society of Accountants & Auditors
Member, Egyptian Tax Society
Member, Egyptian Society for Public Finance and Taxation

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Disclaimer: This bulletin is prepared for general information on the legislation in force at the date of its publication. It does not constitute a professional opinion or tax or legal advice on any particular matter, and it should not be relied upon in place of advice based on an examination of the circumstances of each case. Nassef & Partners International accepts no responsibility for any action taken, or refrained from, in reliance on its contents. The positions stated remain subject to subsequent legislation and decisions.