SMEs call for more awareness on e-invoicing prior to rollout

BUSINESS   FINANCE

Small and medium enterprises (SMEs) have appealed to the Uganda Revenue Authority (URA) to conduct more awareness campaigns about the new Electronic Fiscal Receipting and Invoicing System (EFRIS) before its rollout.

The Uganda Small Scale Industries Association (USSIA) executive director Veronica Namwanje said that enhanced sensitisation would be key in facilitating faster adoption of the new system.

"This is the new normal; you will adopt but we need URA to sensitise our members about how this works and its importance," she said.

Electronic invoicing (e-invoicing) is the ability to send an invoice digitally and automatically between the accounting systems of business suppliers and buyers, shortening their cash flow cycle.

The EFRIS is an automated compliance system that is supposed to see all Value-Added-Taxpayers (VAT)-registered taxpayers issue e-invoices and e-receipts for any expenditure made or income earned.

It was initiated by URA as part of its domestic revenue mobilisation strategy, which is intended to manage the issuance and centralised tracking of all invoices and receipts by business taxpayers in Uganda. 

While the new system was supposed to come into force on July 1, 2020, URA was forced to extend it for more three months to September 30, after taxpayers raised issues over its rollout.

This, therefore, means that from October 1, 2020, all VAT-registered taxpayers' transactions and anyone purchasing goods or services from a VAT registered taxpayer will need to be supported by an e-invoice or e-receipt in order to claim a tax deduction or input tax credit.

With the new system, when a transaction is initiated using one of the prescribed EFRIS methods, its details are transmitted to URA's back end system for fiscalisation to produce electronic fiscal documents - e- receipts and e-invoices.

Tough clause

In its June 2020 National Budget bulletin dubbed Navigating through the uncertainty, PricewaterhouseCoopers expressed concern over a clause in the e-invoicing and e-receipting regulations, 2020, which states that the expenditure of a taxpayer who buys goods or services from a designated e-invoice supplier shall not claim an input tax credit unless it is supported by an e-invoice or e-receipt.

The PwC country Senior Partner Francis Kamulegeya said that while e-invoicing is a welcome move, it could see taxpayers being penalised where they purchase goods and services from a designated e-invoice supplier, who fails to issue them with an e-invoice or e-receipt.

According to him, this is an unfair consequence given that it might be more reasonable to place the onus for compliance on the supplier, than the buyer.

He noted that this could lead to disputes related to the deductibility of costs incurred on account of e-invoicing.

A more reasonable approach, according to PwC, could be for the compliance onus to be placed on the relevant taxpayer - supplier but not the purchaser.

"Purchasers of goods and services already have stringent requirements around record-keeping, tax invoices and supplier Tax-Identification Numbers (TINs)," Kamulegeya noted.

According to the URA public and corporate affairs manager Ian Rumanyika, the introduction of the new system seeks to bring the large informal sector onboard.

The system will enable purchasers to check the validity of documents in real-time and simplifying the preparation of VAT returns. It is also expected to curb false refund claims, fictitious purchases with no physical movement of goods and unverifiable claims by taxpayers due to loss of records.

Also, important to note is that e-invoicing is said to have the potential to create a fast and secure way to do business across borders.