Following a press article on the Electronic Fiscal Receipting and Invoicing Solution (EFRIS) published last week in the prosper magazine, URA is persuaded to correct some misguided elements of the story and as such make clarifications to the benefit of the public. To present EFRIS as a new tax or as a system replacing e-Tax (the tax filing system in use currently), the reporter is very far away from the facts.
EFRIS is a smart business-owned solution introduced by the Uganda Revenue Authority (URA) to further facilitate taxpayers to maintain accurate records, keep track of their stock and generate business transaction reports instantly. EFRIS offers these benefits in four modules; Registration, Stock Management, Fiscal Document Management and Reporting with the main aim of addressing business and tax administration challenges related to business transactions and the issuance of receipts to ultimately improve business efficiencies and reduce the cost of compliance.
When rolling out any new cutting edge technology-based solutions like EFRIS, there is usually unease and discomfort that streams from challenging the status quo coupled with the anxiety that comes with learning something new. We are cognizant of the need to enhance awareness for EFRIS and equally important is the need for taxpayers to take a moment to learn and appreciate the EFRIS system and the game-changing benefits it offers.
From our experience of implementing eTax a decade ago – the largest transactional e-government system in the country that handles averagely 1.5 million daily transactions, we are confident that we shall walk this transitional journey of EFRIS much to the realization of shared fruits for us and for the taxpayers. EFRIS facilitates business operators to record business transactions and share the information with URA in real-time (concurrently). A business operator can connect directly to the system via the URA website or using the existing system in your business (system to system connection) to issue e-invoices or e-receipts.
At a later stage, businesses will be able to issue similar e-invoices and e-receipts using Electronic Fiscal Devices (EFDs) and Electronic Dispenser Controllers (EDCs). Once a transaction is initiated using any of the solution’s components, transaction details are transmitted to URA in real-time to generate fiscalized e-receipts and e-invoices.
Regarding claims that the system has led to increased costs doing business with the notion that the Taxpayer has to buy hardware and bring experts to support his/her EFRIS enrolment, we ‘ve picked lessons from our peers in the East African region where similar systems were implemented over 10 years ago.
We’ve learnt that the design of this system has to ensure low-cost implications for businesses. That is why for the case of Uganda, EFRIS provides options for web/phone and direct system connections, unlike our neighbours where it is compulsory for a business person to buy a Fiscal Device to issue e-receipts or e-invoices. Our regional peers are already making efforts to upgrade to Uganda’s version of the system to minimize cost requirements on small enterprises.
Initial EFRIS implementation started with only VAT registered taxpayers who meet the VAT annual sales threshold of Ugx 150 Million . By the end of February 2021, over 97 per cent of all VAT registered taxpayers had been registered on EFRIS with a total of over 17,734 e-invoices issued. We must emphasize that the small businesses that enroll for VAT (and therefore EFRIS), do so voluntarily.
SME start-ups that do not deal in VAT taxable items and whose annual sales fall below the Ugx 150 million mark do not have to register for VAT or EFRIS. Should a business choose to voluntarily enroll for EFRIS, we encourage the business operator to adopt the easier platforms that we have availed. The direct connection of a taxpayer’s system or the issuance of receipts via the URA web portal are cheaper and simpler alternatives.
There is no hardware that a small business needs to procure for now seeing as EFDs are not yet enrolled. We also put in place an offline software system for operators that do not have existing accounting systems and software in place. This free software is downloadable from the URA website and readily usable by the taxpayer, in both online and offline mode. One can can issue E-Invoices and Receipts regardless of whether they are connected to the internet or not.
For the system to system integration, the taxpayer’s system needs to be connected to the URA system. Standard systems will meet no additional costs, but those that need upgrades to meet the requirements set by URA may meet additional costs to integrate with the URA system. This cost may only make sense to large businesses with high volumes of transactions where automating the invoicing process optimizes time and labour. SMEs that cannot meet the cost may opt for the web portal connection option.
EFRIS simplifies the process of declaring taxes. No wonder the first phase of implementing the system has been focused on Value Added Tax (VAT) clients who have strict record-keeping requirements when filing returns to URA in order to claim tax refunds or pay taxes due. EFRIS will in time ease the VAT return filing process. More importantly, taxpayers are now protected from fictitious invoices issued to them by unscrupulous business operators who have made them lose their input tax credits and tax refund claims in the past.
Thanks to EFRIS, clients can verify (on the URA website or the Kakasa with EFRIS App) invoices issued to them to safeguard themselves from such losses. For invoices that are returned by the EFRIS system, the system highlights the problem on the invoice and notifies the taxpayer of the corrections needed (e.g. if a taxable item is presented as non-taxable).
Fundamentally, EFRIS allows you to correct errors on your invoices and make adjustments with Credit Notes and Debit Notes. This facility is available among others under Fiscal Document management, request credit note to reduce the invoice amounts (e.g. when certain goods are damaged or for any other reason) following the prompts on the EFRIS platform.
It is therefore inaccurate to claim that the EFRIS system rejects credit notes since we have reports of over 3,000 credit notes that have already been issued by the Taxpayers who have embraced the system. Where users have had reported challenges and noted complications to comply with the system e.g. having to take 6 months to integrate over 80,000 items on the system, this is a knowledge gap.
We’ve designed EFRIS to take you less than 15 minutes to upload 80,000 items, not 6 months as the proprietor of Mega supermarket claimed. The system is designed with a pick and drop capabilities and as such, one can upload over 2 million products on the system within 30 minutes. We will intensify EFRIS awareness to curb these knowledge gaps.
EFRIS is an opportunity for small enterprises to re-organise and essentially acquire new markets. Large retailers like supermarkets should encourage and assist their suppliers to register on EFRIS, with or without VAT to streamline and track transactions. URA is also ready to assist organised groups of suppliers from various large retailers and has already invited and trained the staff of many of these retail outlets.
Previously we’ve had suppliers who have cried foul when Retailers that they have supplied have closed shop without paying them for supplies made. EFRIS will have such records and government interventions in similar circumstances will be more informed. During the implementation of the etax system, URA encouraged employers to have all their staff registered for Tax Identification Number (TIN) to streamline the accounting for PAYE (a form of Withholding Tax). Years down the road, employees who did not register for TIN have found difficulties claiming refunds (e.g. Withholding tax, where due).
The Electronic Fiscal Receipting and Invoicing Solution (EFRIS) is an initiative under Uganda’s Domestic Revenue Mobilization program whose aim is to address the tax administration challenges. As a nation, we need to jointly support and embrace it.
The author is the Ag. Assistant Commissioner Public and Corporate Affairs at Uganda Revenue Authority (URA)