Efris: Machine between the taxman and taxpayers

Traders in major cities in the country have closed their businesses protesting the Uganda Revenue Authority (URA)’s implementation of the Electronic Fiscal Receipting and Invoicing Solution (Efris) in their businesses. 

The traders associations are opposed to the Efris, which they say is cumbersome in implementation and comes with heavy penalties when a mistake is made.

Businesses with an annual turnover of at least Shs150m or one who makes gross sales of Shs420,000 per day in three consecutive months are those to be registered under Efris.

The system enables URA to monitor the business transactions of a registered taxpayer in real-time through a computer-to-computer system interface.

To begin with, the Value Added Tax (VAT) registered taxpayer must use an Efris.

Mr Samuel Asiimwe, a tax and business management consultant, said before an Efris system is installed in the business, the trader has to have proper bookkeeping accounts that show details of what they have in stock where they brought it from and details of every item in the system.

“A business needs a computer and a printer, and you have to pay Shs2.5m as integration fee. You have to have data, an IT person. In this system you need someone with those skills and an accountant to be able to manage because the Efris system needs quick book accounting,” Mr Asiimwe said on April 17.

These are new costs to the businesses.
URA Commissioner General John Musinguzi recently said they have established a mobile application that solves constant power connection.

But Mr Asiimwe said the mobile applications are still problematic and dysfunctional, and while many of his clients downloaded it, it hasn’t worked for more than a month.

At the end of the year, you have to pay an annual fee of Shs1.5m for the Efris system.

Mr Asiimwe said once the trader starts using Efris, he or she has to ensure that all his or her suppliers are VAT registered, or else the former will pay  the input VAT on the supplied product.

“This has chased away many small suppliers in the market. For instance, a supermarket will not buy bread from a supplier who isn’t VAT registered, because URA will charge all the VAT from the supermarket,” Mr Asiimwe said.

The chairperson of Kampala Capital City Traders Association (Kacita), Mr Thaddeus Nagenda Musoke, said most the businesses in Uganda are still informal both in capital and size and Efris is challenge to them.

“This is due to the high cost of compliance imposed on small businesses in terms of applicability through Internet use as well as the undesired turn-around time required to issue an e-invoice or e-receipt,” he said. 

Mr Musoke said many traders didn’t get formal education to be able to use the electronic devices.

Mr Moses Lwegaba, a leader in the traders’ association, said it means the traders have to employ other people with the skills to use Efris.

“The device needs data and someone with the book keeping and ICT skills. Many of our promising traders can’t even write their names on paper. To be able to avoid challenges with URA, you have to hire someone with those skills. That is an additional cost,” Mr Lwegaba said.

For a person operating an Efris system, they must be very cautious not to make a mistake as it will lead to an error and each attracts a penalty of Shs6m.

“If you are a registered VAT payer and you are found to have sold an item without an Efris, you are penalised Shs30m or 10 years in jail or both.

Mr Nagenda said: “It’s been observed that the Anti-Corruption Court is full of Efris culprits yet it’s a new tech, which implies a gap or disconnect within its usage and its intended clientele. The use of the gun in collecting taxes doesn’t depict a humane image before the taxpayer.”

How EFRIS works
Electronic Fiscal Receipting and Invoicing Solution (Efris) entails the use of electronic fiscal devices (EFDs), e-invoicing, or direct communication with business transaction systems to manage the issuance of e-receipts and e-invoices in accordance with the Tax Procedures Code Act 2014.

Once a transaction is initiated using any of the solution’s components, transaction details are transmitted to URA in real time to generate e-receipts and e-invoices.

Section 73A of the Tax Procedures code 2014, provides the legal framework for implementing Efris. It is mandatory for all VAT registered taxpayers to enroll on the system.

However, those outside this category are advised to implement EFRIS and take advantage of the various benefits.
 
To register for Efris, one needs a TIN and password to the TIN. An OTP (one-time password) is sent to the user’s active email address or telephone number.

How to register for Efris
Step 1: The taxpayer accesses the Efris link on the web portal https://www.ura.go.ug and then logs in using their portal credentials. A one-time password (OTP) is then sent to their email or phone number as selected which the taxpayer inputs and gets access to the EFRIS homepage.

Step 2: The taxpayer then selects “First time registration” followed by specification of whether to use e-invoicing and or EFDs, additional places of business (if any) after which the application is submitted to URA for approval.

Step 3: Once the taxpayer’s application is approved by URA, they are then able to use e-invoicing and or EFDs.

NB: In addition to completing the system to system connection, accessing the URA web portal or installing the Desktop client app on your device such as computer or smart phone, you must have power, a TIN, and Password to authenticate yourself, and be connected to the internet. For system to system connection clients set up an API connection with URA to secure the connection.

Benefits
• Helps to fast track the refund claims since the information is already available in the system.

• Enables URA avail taxpayers with prefilled tax returns in future to minimize delays and costs involved in filling tax returns.

• Prefilled tax returns will help taxpayers avoid penalties for late or non-filing

• Taxpayers will be in position to track and validate business transactions in real time for efficient business management. 

• The solution eliminates the risk of physical loss of tax invoices 

• Fair assessments of taxpayers’ tax positions which reduce unfair competition in business.

Adopted with modifications 
from URA website

What ministers, traders discussed
Today 16th April     2024, the Minister of Finance, together with the Minister of Trade, Industry and Cooperatives and the Minister of State for Trade, held a meeting with representatives of the traders.    

Following a long discussion with the traders, it was agreed as follows:
1.The Ministry of Finance, shall,
within the next two weeks, study and consult on the proposal to increase the current VAT threshold and the VAT rates, and communicate the ministry’s position on the matter. 

2.  URA shall continue to implement the EFRIS. However, emphasis shall be placed on sensitization and handholding of tax payers to appreciate the EFRIS and also ensuring that it is demystified among all tax payers. To that end, URA shall:

i.  with immediate effect establish an office in Kukuubo that is solely dedicated to providing EFRIS support services to all traders and other tax payers,

ii. Exercise more sensitivity in the enforcement of EFRIS..., so as to give all tax payers time to appreciate the EFRIS system,

iii.The Commissioner General URA shall submit the list of Traders currently having outstanding EFRIS penalties, for Hon. Minister’s Consideration for possible waiver in accordance with the law.
 
3. Regarding the anti-competition trade practices by manufactures, the Ministry of Trade is finalising the Regulations to implement the Competition Law that was recently accented to by the President. 

4. It was agreed that traders shall immediately resume normal business as government concludes consultations awith the leadership of the Traders. The consultations shall be concluded within two weeks. 

[email protected]