Egypt, 19 September 2024
Egypt’s New VAT Rules: Mandatory TRN and UIN Validation for B2B Compliance
Starting November 1, 2024, businesses selling into Egypt will be required to validate their B2B buyers’ Tax Registration Number (TRN) along with a newly introduced identifier, the Unique Identification Number (UIN). This dual validation is essential for zero-rating transactions under the reverse charge VAT mechanism, aimed at enhancing VAT compliance and preventing fraud.
This regulatory change particularly affects multinational companies offering digital services, such as software licenses, streaming subscriptions, and digital advertising. To ensure compliance, companies must integrate automated tax ID validation mechanisms into their operations.
What You Need to Know: Registering with the Egyptian Tax Authority (ETA)
To access the new tax ID validation service, businesses must register with the Egyptian Tax Authority (ETA). According to VAT Law No. 3 of 2022 and the Minister of Finance Decree No. 160 of 2023, non-resident vendors providing digital or remote services must complete a simplified tax registration process. This step is crucial for maintaining compliance and avoiding disruptions to business operations.
How This Affects Egyptian Businesses
Egyptian companies procuring digital services from international vendors will also need to secure a UIN. This secret identifier enhances the reliability of tax ID validation, offering a secure way to confirm the buyer’s eligibility, thereby boosting confidence in the VAT compliance process.
Key Dates to Keep in Mind
- October 1, 2024: Egyptian businesses can begin applying for UINs.
- November 1, 2024: The new TRN and UIN validation method becomes mandatory for all B2B transactions.
Why the UIN Is a Game-Changer
To curb tax evasion and improve VAT compliance, the ETA is introducing the UIN-a secret 39-character identifier. With the widespread availability of TRNs, individuals have exploited the system by posing as legitimate B2B buyers to avoid paying VAT. The UIN, coupled with real-time automated validation, ensures that only verified businesses can use these identifiers, thus enhancing tax collection and reducing fraud.
How TRN and UIN Validation Will Work
At the core of Egypt’s VAT rules is the requirement to validate both the TRN and the new UIN for cross-border B2B transactions. The UIN introduces an additional layer of security and precision in the validation process, particularly for businesses purchasing digital services from international vendors. This ensures more robust compliance with VAT regulations.
API Integration for Seamless Validation
Businesses will need to integrate their systems with ETA’s API to automate the real-time validation of both TRNs and UINs. This API integration allows for seamless data exchange between non-resident vendors and the ETA, ensuring the legal business buyer’s tax IDs are verified before completing a transaction.
The API integration will require technical resources and programming efforts to create an interface that communicates with ETA’s system. Once established, this will enable businesses to check the validity of tax identifiers instantly.
Stay Compliant with the New Regulations
To access this system, companies must register on the ETA’s website starting October 1, 2024. This registration process includes acquiring the necessary client credentials and API access to ensure compliance with the upcoming changes.
From November 1, 2024, UINs will be mandatory for B2B transactions, ensuring the accurate application of the reverse charge VAT mechanism for non-resident vendors. Businesses must act now to align their systems with these new rules and avoid potential compliance risks.