EFRIS Implication on Businesses

Tally Solutions | Updated on: February 17, 2023

What is EFRIS?
Modes for EFRIS implementation
Benefits of EFRIS for businesses
Enforcement and penalties for non-compliance
Changes to the VAT return and process
How businesses can prepare for EFRIS Uganda

What is EFRIS?

The Electronic Fiscal Receipting and Invoicing Solution (EFRIS) is a compliance system rolled out by the Uganda Revenue Authority. It was launched as part of the Domestic Revenue Mobilisation Strategy, which aimed to track all invoices and receipts from source to destination by those required to issue them. It applies to both exempt and taxable transactions.

EFRIS Uganda consists of issuing valid e-invoices and e-receipts authenticated by the EFRIS system. Every valid e-invoice and e-receipt must have certain fields that prove the authenticity of the sales invoice. All VAT-registered taxpayers must use EFRIS to issue either e-invoices or e-receipts, depending on the taxpayer category they fall under. VAT-registered taxpayers need to issue e-invoices, while others need to issue e-receipts.

Key things to know about EFRIS in Uganda

How to Generate e-Invoice in Uganda?

Modes for EFRIS implementation

EFRIS Uganda can be implemented in a variety of different ways depending on the business size, how much it is willing to spend on new devices, and whether it already has a system of issuing invoices in place.

System-to-system connection

A system-to-system connection must be used by businesses already using an invoicing system, business management system, or ERP system in their business premises. These businesses do not need to purchase other devices for implementing EFRIS as the connection between EFRIS, and their current system will suffice. The connection between the two must be established because the current system can issue e-invoices and e-receipts.

This is how the system-to-system connection works for every business transaction:

A business transaction occurs, and the details are captured by the current system. This transaction is immediately encrypted and sent to the URA.
EFRIS then decrypts the data received and formats it so that it turns into an e-invoice or e-receipt. The QR code, verification code, and other features are added to the e-invoice or e-receipt.
The e-invoice or e-receipt is then sent back to the system, and the business can issue it to its customer.

URA web portal

EFRIS implementation can be done by using the URA web portal. This is a good option for businesses that do not have many transactions. You must log in to the EFRIS system and have at least some stock to use in the web portal to generate invoices. Then you need to go to the fiscal document management section and fill in the invoice details. You can then easily generate e-invoices for your customers in minutes.

Client application

A client application can be used as a mode to implement EFRIS Uganda. A client application is software that must be installed and used to generate e-invoices and e-receipts. The business simply needs to download and install the client application on their preferred devices. This can be their desktop computers, laptops, or smartphones. Then they can use it to generate valid e-invoices and e-receipts for their customers.

Fiscal Devices

Fiscal devices such as EFDs and EDCs can be used for EFRIS implementation. Their cost will depend on the device type, the brand, the model, and their market position.

Electronic Fiscal Device (EFD)

EFDs establish a connection between a point-of-sale system (POS) and a virtual Sales Data Controller (SDC). This connection enables the issuance of e-invoices and e-receipts. EFDs are used primarily by retailers and can also be used when cash sales are being made by businesses.EFDs make it easier for businesses to search for fiscal data, store all information related to e-invoices and e-receipts, and generate summary reports. The reports can be generated as frequently as the business wishes, daily or weekly.

Electronic Dispenser Controller (EDC)

EDCs are used for pump gas monitoring. They come with a compressor gun that is monitored as it moves and the capacity is then calculated based on that. When a sale is made at the gas station, the relevant information is transferred to the EFD which is connected to the EDC. This is when the e-invoice or e-receipt is generated. EDCs are specifically made for use at petrol stations.

Unstructured Supplementary Service Data (USSD) quick code

The USSD is also known as Quick Code and it is a mode through which EFRIS can be implemented. A USSD establishes a connection between a smartphone and a mobile network operator. Every taxpayer is given a code by the URA and they use this to generate either an e-invoice or an e-receipt. They can easily do this using their smartphone.

Benefits of EFRIS for businesses

EFRIS Uganda is beneficial to businesses in the following ways.

Faster refund claims

EFRIS enables businesses to comply with the rules and regulations of the URA. It enables the authority to quickly process the refund claims and settle them. This makes the entire process occur much faster and allows businesses to receive their refund sooner rather than later. As the information is stored in the system, records can be retrieved in record time for faster processing.

Prefilled tax returns

Filing tax returns is often a complex and time-consuming process for taxpayers. With the introduction of EFRIS, filing tax returns has been made much easier. EFRIS enables prefilled tax returns to be filed by taxpayers, which ensures there are no errors during the filing process. It also cuts down the time taken to file returns and considerably reduces its costs.

Track and validate invoices in real-time

Every business transaction in an invoice is tracked by EFRIS and validated in real-time. This saves time in the verification process and ensures every tax invoice generated to the buyer is validated by the URA instantly. This allows businesses to perform operations quickly and efficiently. EFRIS also promotes business management, thereby giving businesses in Uganda a boost.

Safe for long-term record keeping

EFRIS Uganda ensures all business transactions are stored for the long term. As the business data is stored digitally in the system, there is no need to store printed copies or hard copies of every invoice. This keeps the records much safer than having them piled in a folder.

Enforcement and penalties for non-compliance

Input tax credit claim

A taxpayer cannot claim the input tax credit if it is not supposed by an e-receipt or an e-invoice. They also cannot claim income tax deductions, although this is only valid for those buyers who transact with a VAT-registered person.

Non-issuance of e-invoices or e-receipts

The penalty for not issuing an e-invoice or e-receipt can be any of the two; UGX 6 million or the tax due by the taxpayer. The higher value of the two will need to be paid to the URA as a penalty for not issuing an e-invoice or e-receipt to the buyer.

Committing an offense

If a taxpayer uses an EFD that has not been approved or authenticated by the URA, he is said to have committed an offense. He can be convicted in this case and may be jailed for up to three years or fined up to UGX 6 million.

Changes to the VAT return and process

The URA has made several changes to the VAT return and process. Some of these changes are as follows.

A new column requires you to input the invoice number or the fiscal document number (FDN) in the return tax schedule for sales.
Earlier, only the invoice number was required, and it was used for tracking invoices for VAT reconciliation. Now, a range of features is added to verify and track invoices.
When a taxpayer wishes to claim input tax credit and refund, the TIN, FDN, and e-invoice details will be verified during the return submission process.
When taxpayers claim input tax credits, they can only use e-invoices that have been generated and shared with the customers during the filed tax period.
The URA provides customized reports to every taxpayer registered with the system to make it easier to file VAT returns.

How businesses can prepare for EFRIS Uganda

Buy a reliable business management solution

Using business management software is the easiest and best way to get the most out of EFRIS. A well-built and robust solution such as TallyPrime enables businesses to create customized invoices and perform various accounting tasks. This ensures every business transaction is accurate and correct from the get-go.

A software solution that seamlessly integrates with EFRIS is key to ensuring you can instantly validate and process tax invoices. Business management software comes with a wide range of modules that make it useful for running a business, improving productivity, increasing profits, and enhancing revenue. It makes filing tax returns simpler as well.

Stay updated

The URA has issued FAQs on its web portal to make it easier for new taxpayers to comply with the changing requirements. It also has step-by-step guides that help taxpayers understand the various aspects and components of EFRIS, thereby promoting adoption. To prepare for EFRIS Uganda, you should always refer to the latest news.

You can follow URA’s social media handles on Twitter to ensure you get the latest updates about any taxpayer information you need. Their social media handles also show you in-depth tutorials on generating invoices and all other important details about EFRIS.

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