Did you know that issuing electronic invoices for freelance professions could save you fines of up to 100,000 Egyptian pounds? In the digital transformation era we’re living in, electronic invoices for freelance professions has become a legal necessity rather than just an option for self-employed professionals in Egypt. This digital document not only verifies the financial transactions you make as a freelancer, but it also provides numerous benefits, such as saving time and effort, increasing accuracy in financial transactions, and organizing your tax records more efficiently.
Whether you’re a doctor, lawyer, engineer, or any other freelancer, understanding how to issue electronic invoices and complying with this requirement will help you avoid legal accountability and better organize your business.
In this article, we’ll provide you with a comprehensive guide on how to issue electronic invoices for freelance professions, the necessary steps to register in the system, the most important accounting programs you can rely on, as well as tips to overcome challenges you may face.
What is electronic invoices for freelance professions?
electronic invoices for freelance professions is a digital document that is issued, exchanged, and stored in electronic format. It contains all the data and information included in a traditional paper invoice. This invoice is considered a legal document that proves a financial transaction between the freelancer and the client, containing details of the service provided, its value, and the taxes due on it.
Electronic invoicing represents a revolution in the world of financial transactions, transitioning from the traditional paper format to the modern digital format. This transformation is not limited to changing the medium from paper to electronic format but extends to include a comprehensive change in the mechanism of issuing, storing, and exchanging invoices.
electronic invoices for freelance professions are issued through specialized accounting software, electronically signed, and sent to the concerned party (client and tax authority) via electronic means, and stored in electronic databases that are easily accessible when needed.
The Difference Between Traditional and electronic invoices for freelance professions
electronic invoices for freelance professions differ from traditional invoices in several important ways, including:
- Medium: Traditional invoices rely on paper, while electronic invoices rely on digital media.
- Issuance Mechanism: Traditional invoices are issued manually or using printing machines, while electronic invoices are issued through specialized accounting software.
- Signature: Traditional invoices require a manual signature and stamp, while electronic invoices rely on electronic signatures.
- Storage: Traditional invoices need physical space for storage, while electronic invoices for freelance professions are stored in electronic or cloud databases.
- Tracking and Searching: It’s difficult to track and index traditional invoices, while electronic invoices are easy to search for and retrieve.
- Cost: Traditional invoices require costs related to printing, distribution, and storage, while electronic invoices significantly reduce these costs.
- Environment: Traditional invoices consume paper and negatively affect the environment, while electronic invoices are environmentally friendly.
Target Groups for electronic invoices for freelance professions
Freelancers or non-commercial professionals are all professionals or those engaged in activities where the primary element is work. This means that this category of the tax community does not rely on capital as an essential element for practicing the activity, as is the case in commercial activities such as buying, selling, manufacturing, supplying, exporting, and importing.
The list of those required to issue electronic invoices for freelance professions includes all freelancers who provide services for a fee and are subject to taxes according to Egyptian law, including:
- Registered financiers with the Egyptian Tax Authority from among freelancers.
- Financiers who practice their activity through a professional license.
- Freelancers who practice their activities through digital platforms, such as Facebook, TikTok, YouTube, etc., whether as a primary or additional activity.
Examples of Freelance Professions Included in the System
Freelance professions required to issue electronic invoices include a wide range of professions, including:
- Doctors: Human physician, dentist, and veterinarian (note the exclusion of pharmacists, as their activity relies on drug trade and others, making it a commercial activity rather than a professional one).
- Engineers: In various specializations (civil, architectural, electrical, mechanical, etc.).
- Lawyers: At various levels and fields of work.
- Accountants and Auditors: Including chartered accountants and auditors.
- Experts: Valuation experts, court experts, and others.
- Tourist Guides.
- Artists: Directors, actors, singers, authors, program producers and presenters, and specialists in lighting, sound, and photography.
- Designers: Graphic designers, fashion designers, interior designers, and others.
- Consultants: In various fields such as management, marketing, human resources, etc.
- Translators.
- Trainers and private tutors.
The Role of the Egyptian Tax Authority in Regulating Electronic Invoice Issuance
The Egyptian Tax Authority plays a pivotal role in regulating the process of issuing electronic invoices for freelance professions. This role is represented in:
- Creating and managing the electronic invoice system: The authority develops and manages the electronic platform through which electronic invoices are issued.
- Setting controls and standards: That govern the process of issuing electronic invoices and ensuring their compliance with legal and tax requirements.
- Approving accounting programs: That can be used in issuing electronic invoices and ensuring their compatibility with the system’s requirements.
- Providing technical support: For those registered in the system and training them on its use.
- Supervision and follow-up: To ensure that freelancers comply with issuing electronic invoices according to the specified controls.
- Issuing instructions and guidelines: To clarify the mechanisms for dealing with the system and its requirements.
- Imposing penalties on violators: To ensure compliance with the system’s requirements and achieve its objectives.
Benefits and Advantages of Issuing electronic invoices for freelance professions
Freelancers enjoy numerous benefits if they issue their electronic invoices through one of the best specialized programs for this matter, such as Mofawter. Among the most important benefits and advantages of issuing electronic invoices for freelance professions are:
1- Saving Time and Effort and Increasing Efficiency
One of the most important advantages of issuing electronic invoices for freelance professions is its ability to save time and effort for freelancers and significantly increase work efficiency. This feature positively reflects on business performance and improves productivity.
2- Reducing Paperwork and the Need for Manual Invoice Writing
The transition from the traditional paper invoice system to the electronic invoice system significantly contributes to reducing paperwork and exhausting manual procedures. Instead of writing invoices manually or printing them, then signing, stamping, and sending them to clients, freelancers can issue invoices electronically with just one click.
This transformation makes:
- Issuing electronic invoices takes just a few minutes, instead of the long time it used to take to prepare traditional invoices.
- Accounting software handles the task of calculating values and taxes accurately, saving the effort expended in review and audit.
- Sending the invoice electronically to the client happens immediately upon issuance, saving the time spent on manual or postal delivery.
3- Easy Tracking and Electronic Organization of Transactions
electronic invoices for freelance professions provide the ability to track financial transactions and organize them in a more efficient and effective way, through:
- Automatic Indexing: Accounting software automatically indexes invoices and classifies them according to different criteria (date, client, type of service, etc.), making it easy to refer to them when needed.
- Quick Search: You can easily search for any invoice using keywords or specific criteria, without having to browse paper files.
- Periodic Reports: You can create periodic reports summarizing financial transactions during a specific period, helping to evaluate financial performance and make appropriate decisions.
- Continuous Monitoring: You can continuously monitor the status of invoices (paid, unpaid, late), helping to manage cash flow efficiently.
- Integration with Other Systems: The electronic invoice system can be linked with other systems, such as the accounting system and the customer relationship management system, enhancing integration and increasing work efficiency.
4- Accuracy and Smoothness in Financial Transactions
Accuracy and smoothness are among the main advantages provided by issuing electronic invoices for freelance professions, as they contribute to improving the quality of financial transactions, in addition to reducing errors that may occur in traditional invoices.
5- Reducing Human Errors in Calculations and Registrations
Electronic invoices rely on advanced accounting software that performs calculations with high accuracy, significantly reducing the possibility of human errors in:
- Calculating the value of services: Where the value of services provided is calculated accurately according to pre-determined prices.
- Calculating taxes: Value-added tax and other taxes are automatically and accurately calculated, according to legally established rates.
- Calculating discounts: Discounts (if any) are correctly applied and the final value is accurately calculated.
- Data entry: Data entry errors are reduced through the use of ready-made templates and automatic audit systems.
6- Easy Data Tracking and Quick, Informed Decision Making
Electronic invoices for freelancers provide the ability to track financial data more effectively, helping to make quick and informed decisions.
7- Saving Costs and Expenses
Saving costs and expenses is one of the important economic advantages achieved by issuing electronic invoices for freelance professions. Although the transition to the electronic system may require an initial investment, it leads to significant cost savings in the long term.
8- Reducing the Need for Employees and Mailing and Distribution Costs
Issuing electronic invoices for freelance professions contributes to reducing reliance on the human element in some invoice-related tasks, leading to savings in human resource costs.
9- Facilitating Tax Calculation and Compliance with Tax Requirements
Facilitating tax calculation and compliance with tax requirements is one of the basic advantages of issuing electronic invoices for freelance professions, as it contributes to achieving tax compliance more accurately and easily, and avoiding violations and penalties resulting from them.
10- Accuracy in Calculating and Paying Value-Added Tax
Electronic invoices are characterized by their ability to calculate value-added tax with high accuracy, contributing to achieving tax compliance and avoiding any violations that may result from incorrect calculations.
How to Issue electronic invoices for freelance professions
The process of issuing electronic invoices for freelance professions begins with registration in the electronic invoice system. This requires providing a set of documents and basic requirements that ensure the process proceeds properly and legally. These documents include:
1- Personal Documents
- A copy of the personal ID card or passport of the financier if they are the applicant.
- A copy of the personal ID card of the authorized person in case the application is submitted through an authorized person.
- A certified authorization letter in case an authorized person is chosen to extract the invoice.
2- Tax Documents
- Original and copy of the financier’s tax card.
- Certificate proving registration in value-added tax (if any).
3- Professional Documents
- Professional practice permit.
- Valid professional syndicate card.
- Bank authorization and commercial registry with a validity period of not less than three years (if any).
4- Contact Information
- Company number and address.
- Email of the company or professional.
- Phone number of the company or professional.
5- Authorized Person Information (if any)
- Complete information of the authorized person including personal ID card, ID number, and email.
After preparing the required documents for issuing electronic invoices for freelance professions, the freelancer can start the registration process in the electronic invoice system through the following steps:
1- Registration via the Egyptian Tax Authority Electronic Portal
- Access the official website of the Egyptian Tax Authority.
- Create a new account or log in if you already have an account.
- Choose the service “Registration in the Electronic Invoice System.”
2- Filling out the Registration Form
- Enter the required personal and tax data.
- Enter contact information and practice address.
- Specify the type of activity and field of work.
3- Uploading Required Documents
- Upload electronic copies of the required documents (personal ID, tax card, practice permit, etc.).
- Ensure the clarity and validity of the documents.
4- Choosing the Method of Issuing Invoices
- Determine whether you will use the Tax Authority portal directly (for companies that issue less than 200 invoices per month).
- Or whether you will use a special accounting program to issue electronic invoices for freelance professions such as Mofawter (for companies that issue more than 200 invoices per month).
5- Obtaining Approval
- Wait for the Tax Authority’s approval of the registration request.
- Receive system login data (username and password).
6- Training on System Use
- Review the training materials available on the Tax Authority portal.
- Attend training courses that may be organized by the Authority (if any).
- Learn how to issue, send, and receive invoices through the system.
Criteria for Choosing the Appropriate Accounting Program for Issuing Invoices
The process of issuing electronic invoices for freelance professions requires the use of an accounting program compatible with the requirements of the electronic invoice system in Egypt. Choosing the appropriate program is considered an essential step to ensure the ease and efficiency of the invoice issuance process. Therefore, when choosing the program, the following criteria should be considered:
- Compatibility with the requirements of the Egyptian Tax Authority: Ensure that the program is approved by the Egyptian Tax Authority and that it supports the required encryption and security standards and the approved electronic signature.
- Ease of use: The program should have a simple and easy-to-use user interface, provide a user guide in Arabic, and provide 24-hour technical support.
- Flexibility and integration: The program should have the ability to integrate with other systems (accounting system, customer relationship management system, etc.) and customize the system according to business needs.
- Features and functions: The program should allow the creation of invoice templates, easy addition of customers and products or services, as well as tracking the status of invoices, tracking payments, and issuing various reports.
- Security and privacy: The program for issuing electronic invoices for freelance professions must have a high level of security and data protection, in addition to a strong privacy policy, with the ability to make data backups.
Challenges of Issuing electronic invoices for freelance professions
Despite the many advantages provided by issuing electronic invoices for freelance professions, there are some technical challenges that may face freelancers, especially at the beginning of system implementation. Understanding these challenges and finding solutions for them helps to facilitate the transition to the electronic system.
Among the most prominent challenges facing the process of issuing electronic invoices for freelance professions are:
- Difficulties in using electronic systems for beginners, either due to the unfamiliar user interface or because the language used in the program is unfamiliar to some users.
- Problems with data entry and understanding the required fields and how to fill them correctly, in addition to the fear of making errors in data entry.
- Inability to solve simple technical problems that may appear during program use, and the continuous need for technical support, which may delay the invoice issuance process.
- Concerns about the security of financial and personal data stored in the system, and fear of system breach or data loss.
To overcome the technical difficulties that may appear when issuing electronic invoices for freelance professions, the following suggestions can be followed:
1- Training and Education
Take advantage of the training courses offered by the Tax Authority or software companies, review the instructional guides and educational videos available on the internet, and seek help from more experienced colleagues in using technology.
2- Choosing an Easy-to-Use Accounting Program
Look for accounting programs characterized by a simple and easy-to-use user interface, and choose programs that provide support in Arabic, which you will definitely find in the Mofawter program.
3- Seeking Help from an Accounting or Technical Expert
The freelancer can seek help from an accounting or technical expert to assist him at the beginning of using the system. He can also employ an administrative assistant familiar with technology to help in issuing invoices.
Penalties and Fines Resulting from Not Issuing Electronic Invoices for Freelancers
Non-compliance with the requirements for issuing electronic invoices for freelance professions exposes the professional to many financial and legal penalties and fines. According to the Unified Tax Law, the penalties for non-compliance with electronic invoice requirements include:
- Paying a financial fine with a minimum of 20,000 pounds and a maximum of 100,000 pounds, and the fine may double in case of repeated violation.
- Government institutions’ refusal to deal with non-compliant freelancers.
- Non-acceptance of paper invoices by the Tax Authority, which affects tax accounts.
- Suspension of some services provided by the Tax Authority or other government agencies.
- In some cases, penalties may reach legal prosecution and criminal accountability.
- The non-compliant freelancer may be placed under tax supervision.
Why Choose Mofawter Program for Issuing Electronic Invoices for Freelancers?
Mofawter program is considered one of the best specialized programs in issuing electronic invoices for freelance professions. It is characterized by a simple and direct user interface, suitable for all freelancers regardless of their technical expertise.
The program supports all the requirements of the Egyptian Tax Authority and ensures full compatibility with the required encryption and security standards. It also provides excellent technical support service around the clock in Arabic, allows for the issuance and electronic sending of invoices quickly, and enables you to index and classify invoices in an organized manner, helping you track your financial transactions easily and accurately.
Moreover, Mofawter program is characterized by its ability to integrate with other accounting systems, facilitating the process of organizing your accounts and preparing tax returns with high efficiency. It automatically and accurately calculates value-added tax and other taxes, reducing the possibility of human errors in calculations and ensuring compliance with tax regulations.
In conclusion, issuing electronic invoices for freelance professions is no longer an option but has become a legal necessity that helps you organize your business and avoid large financial penalties. Therefore, do not hesitate to take the first step towards digitizing your financial transactions by relying on an appropriate accounting program such as Mofawter. Take the initiative today to join the electronic invoice system and benefit from its multiple advantages to develop your business and comply with tax requirements.
