The Kenya Revenue Authority (KRA) has invited Kenyans to give their views on two proposed tax regulations – the Income Tax (Turnover Tax) Regulations 2023 and the Tax Procedures (Electronic Tax Invoice) Regulations, 2023.
According to a notice signed by KRA’s Commissioner General, Humphrey Wattanga, on behalf of the Cabinet Secretary for the National Treasury and Economic Planning, Njuguna Ndung’u reviewed and developed the draft regulations.
“In compliance with the same Act, and on behalf of the Cabinet Secretary for the National Treasury and Economic Planning, the Commissioner General invites interested members of the public and stakeholders to submit their inputs and comments for consideration in finalizing of the above regulations,” the notice specified.
Further, the tax authority noted that the draft regulations could be found on the KRA website.
“You may download the same for your reference,” KRA noted.
The Proposed Tax Rules
According to KRA, turnover tax is a tax charged on businesses whose gross turnover is more than Kshs. 1,000,000 but does not exceed or is not expected to exceed Kshs. 25, 000,000 during any year of income.
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Notably, after the implementation of the Finance Act of 2023, turnover tax is currently payable at the rate of 3% on gross sales.
Further, the finance act rate increased turnover tax to 3% from the previous 1%. Notably, the draft by KRA, specified on the people liable for the turnover tax.
“Any resident person whose income from business exceeds one million shillings but does not exceed or is not expected to exceed twenty-five million shillings in a year of income shall be liable to pay Turnover Tax, “the KRA draft stipulates.
Further, the draft proposed on making turnover tax as a final tax for businesses.
“Any income from a business subject to Turnover Tax shall not be liable to any other tax under this Act,” the draft cites.
More Proposed Regulations by KRA
As for the Tax Procedures (Electronic Tax Invoice) Regulations, 2023, the Finance Act of 2023 added two new provisions.
Consequently, section 23A of the Tax Procedures Act empowers the KRA to establish an electronic system for the issuance of tax invoices and maintenance of stock records.
Further, the Act disallowed the deduction of any expenses for income tax purposes that are not generated through the Electronic Tax Invoice Management System (e-Tims).
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Consequently, Wattanga specified some obligations that eTims users were expected to comply with.
For instance, users were reminded on steps to follow when they discontinue the use of the tax invoice management system.
“Where a user of a system intends to discontinue the use of system due to change of business model or closure of business, the user shall notify the Commissioner, in writing, of the intended discontinuation within thirty days prior to the discontinuation,” the notice read in part.
