Dr. Bahaa Helmy Writes: The Problems of the Tax System’s Digital Transformation… Without Solutions 1

Egypt is witnessing a rapid shift towards digitization and the creation of national databases to keep pace with an era from which we have lagged behind for decades. Digital transformation establishes databases linked to the national ID number, eliminates corruption, bribery, favouritism and tax evasion, and achieves speedy delivery of services to citizens in the least time while preserving the rights of individuals and the state.

The digital transformation of the tax system, however, faces many problems that the Authority has been unable to solve, which has led tax offices to stop accepting taxpayers’ payments because there is no electronic system for registering and dealing through it, without any follow-up from the competent ministry.

Let us read together the letter of Uncle Bahgat, in which he tells his story with the tax authority, so that we learn the truth about the problems facing performance and standing in the way of digital transformation.

He said that he had been a partner with his brother in a company founded in 1999, whose activity officially stopped in 2011 with the approval of the tax authority, but the company’s activity is still continuing on the computer.

At the beginning of February 2021 he went to the competent tax office (a specific one) requesting a certificate of his tax position, taking with him copies of the documents that had previously been handed to the tax authority.

It turned out that the competent auditor was on leave, and they told him to come back after a week; he went at the appointed time and was asked to bring the file from the archive in the neighbouring apartment, so he went to the person in charge of the archive.

Uncle Bahgat says that he was happy at the speed of performance, but he later discovered that his referral to the archive was the starting point towards complication, bureaucracy and administrative corruption in the machinery of government work based on the paper system, especially in the tax system.

He continues his story: the person in charge of the archive told him that the file was not there and that he should come back after two weeks, which he later extended until the blessed Eid al-Fitr, to search for the file.

Uncle Bahgat was not surprised in light of what he saw of the state of the archive, which is “a home for rodents, insects and dust covering the files thrown on the floor up to the ceiling, some of them in unused toilets”; he wished the archive official success, expressing his hope that the file would be found for review. The official promised to make every effort and gave him his telephone number to keep in touch.

After Eid al-Fitr the file was found, so he rewarded him with an Eid gift, then he was asked to come after two weeks, after which he was asked to pay 800 pounds as capital gains on the office furniture; he paid it and thought the matter had ended there.

But his dreams were dashed, as he was referred to the person in charge of the seizures file, who asked him to bring the file; he was happy and said that he would go and fetch it from the auditor. The official told him that it was a different file kept in another archive, and the same scenario was repeated for two more months without the file being found. After a long discussion they relied on the first file, and he was directed to the person in charge of the stamp duty file, who asked him for the stamp duty file from the third archive, where the archive official told him that he would not be able to search for it and that he should come back after a month.

He went to the manager to present the matter, and the manager pretended to be surprised at the delay and the number of visits, but remained passive and silent in the face of the poor performance, the bad condition of the place, the loss of the value of time and other negatives.

Uncle Bahgat had no option but to complete the process and to hope to God that he would not catch corona before receiving the required certificate.

After a while they told him that there was no stamp duty file and that the company was entered on the computer 9 years before it was founded. He says that he armed himself with calm until the entry error was corrected on the only computer in the room, after he submitted proof of this.

Then they asked him to go to the person in charge of earned income, who asked him to bring the file from another archive, and then they referred him to the person in charge of seizures, who asked for the file from the archive. Here Uncle Bahgat erupted and expressed his anger and resentment at what the citizen faces in the tax offices.

Some employees sympathized with him because of his advanced age and told him that these problems are typical and usual in the tax authority, and asked him to bring “copies of the previous balance sheets and returns to make a new file”.

Uncle Bahgat went to the heirs of the accountant to look for copies of the required papers that had previously been handed to the tax authority, brought what was required, and a new file was made at the beginning of this September and the procedures were completed, but the collection department refused to receive the papers. Why? That is what we will learn with the rest of Uncle Bahgat’s story in the next issue.