Recently, traders in downtown Kampala have been protesting against the implementation of the Electronic Fiscal Reporting and Invoicing System (EFRIS), mandated by the Uganda Revenue Authority (URA). Many small business owners argue that EFRIS should only apply to larger suppliers and manufacturers, expressing concerns over its complexity and enforcement procedures.
To comprehend the necessity of EFRIS, it’s crucial to understand its purpose and impact. EFRIS, introduced by the URA in 2020, is a real-time invoicing system designed to enable the immediate transmission of taxpayers’ sales details to the tax authority. By tracking invoices and receipts through unique Tax Identification Numbers (TINs), EFRIS aims to reduce revenue leakage and broaden the tax base.
Various platforms have been developed for EFRIS, including web portals and electronic fiscal devices, to facilitate the issuance of electronic invoices. These platforms also serve as record-keeping tools for businesses, providing functionalities for stock management and invoice tracking.
Initially, EFRIS was mandated only for VAT-registered taxpayers, such as manufacturers and supermarkets, in 2020. However, as of January 1, 2021, businesses meeting the VAT registration threshold of Shs150 million annually are required to register for EFRIS and issue electronic invoices.
For traders and businesses meeting this threshold, EFRIS becomes mandatory, necessitating VAT registration and electronic invoice issuance. This requirement impacts various sectors, from restaurants to small shops, affecting pricing and invoicing processes.
While EFRIS presents challenges, including training costs and potential loss of VAT benefits from non-VAT registered suppliers, it also offers opportunities. Improved record-keeping, stock management, and simplified VAT return filing are among the system’s advantages.
To address concerns and facilitate compliance, URA should consider more lenient onboarding procedures for businesses reaching the VAT registration threshold. Additionally, comprehensive sensitization programs can encourage compliance and alleviate fears among traders.
While EFRIS may initially pose challenges for traders, its implementation aligns with broader efforts to enhance tax compliance and transparency. With proper support and understanding, EFRIS has the potential to streamline invoicing processes and strengthen Uganda’s fiscal framework.