The Ministry of Revenue wraps-up years of preparations underway to adopt electronic receipt platform. The country-wide implementation of electronic invoicing is to take place in a month to transform the tax system, the Minister of Revenue disclosed.
As part of the country’s decade-old plan to launch full fledge e-commerce and as an element of the tax system digitization project, which the authorities intend to do through the implementation of the Integrated Tax Administration System (ITAS), Revenue Ministry has been developing and piloting the e-invoicing system.
Minister Aynalem Nigussie revealed earlier this week that her office will begin implementing the e-invoicing system nationwide “after a one-month period of time.”
Electronic receipt platform on ITAS enables the tax authority, other relevant authorities like trade and investment offices; to interface and access transaction reports at real-time occurrence. Digital payment companies, delivery companies, buyers, suppliers, and other players in the e-commerce ecosystem also will be part of the e-invoicing platform. The system delayed for years due to legal complications and ITAS implementations.
Part of its transformation project, the Ministry was developing the system in an effort to make the sale of goods and services transparent.
One of the benefits of electronically invoicing sales is that it can notify the revenue authorities as it happens. “We will be notified of all the transactions instantly,” she said.
In a press briefing at her office last Tuesday, October 10, 2023, Aynalem explained how depending on manual receipts to collect tax is impeding the controlling mechanism. She described how revenue officers at the federal and regional levels were monitoring receipt issuances physically at each shop.
“Receipt is a fundamental accounting document the revenue authorities need to collect tax from businesses, but there is a fundamental problem with regards to the receipt system,” she said.
Installing the cash register machines was the only option the authorities had at hand, so far. This already existing mechanism that all businesses need to have cash register machines couldn’t solve it alone, as the Minister explained.
The only way she sees a better solution to the “fundamental problem” is by going digital.
“We had to work on the technology development, as it can be the best solution. The system development and piloting work is now complete, and hopefully we will implement it shortly,” she said.
For experts such as Dawit Tadesse, who is an assistant professor of accounting and finance at Addis Ababa University and formerly at St. Mary’s University, government should avoid manual invoicing that involves hard copy receipts and attachments to prevent illegal invoicing.
“Flaws in the paperwork affected even honest taxpayers,” according to Dawit, who also served as an official at the former Ethiopian Revenue and Customs Authority (ERCA) for over a decade, and is currently a managing partner at a tax advisory service providing firm, Lead-Plus Management Consultancy.
“Revenue authorities might not be aware of every transaction made at the cash register machine, even though the machines store the data. Furthermore, e-businesses will now be able to provide electronic invoices,” he explained the use of the new system to be implemented.
Selecting a few firms based on e-business, the Revenue Ministry has been piloting the e-invoicing system. Dawit advises the authorities to carefully handle the reform so that system failures and issues revolving around software development won’t affect it. “It is a long journey but will gradually transform tax collection,” he said.