The Kenya Revenue Authority (KRA) has notified all business owners that anyone doing business in Kenya is required to electronically generate and transmit their invoices to KRA via the electronic tax services (eTims).
Notably, KRA clarified that businesses are required to follow the regulation including those who have not registered for VAT.
According to the taxman, this is in pursuant to the provisions of the Finance Act 2023 which were effective September 1, 2023.
KRA made the reminder through its Commissioner for Domestic Taxes, Rispah Simiyu.
KRA commissioner for Domestic taxes, Rispah Simiyu. PHOTO/Courtesy
“Please note that any business expenditure not supported by an eTIMS generated tax invoice shall not be deductible for tax purposes with effect from 1st January 2024,” the public notice by KRA stated.
Reason for businesses to use eTims
In simple terms, the taxman’s statement indicates that to claim a deduction for a business expense on your taxes, businesspeople need to have a tax invoice generated by the (eTIMS) to support that expense.
The deduction for business expenses helps reduce the amount of taxes that a business must pay.
This is done by subtracting or deducting some expenses from its total income when calculating its total taxable income.
In other words, therefore, all businesses need proper eTIMS-generated invoices to prove business expenses for tax deductions.
KRA also specified that this was part of their agenda to support and facilitate taxpayer compliance.
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About eTims by KRA
The electronic tax service (eTims) is a software solution by KRA which provides technological convenience to meet taxpayers’ compliance needs.
It can be accessed through various electronic devices including computers and mobile phone Apps.
Notably, the eTIMS tool was introduced by the taxman to reduce the cost of compliance for VAT registered businesses.
Therefore, through integration with eTIMS, businesses benefit from real time invoice transmission which guarantess accuracy in tax invoice declarations.
Additionally, it helps with reconciliation between filed returns and payments.
Furthermore, through the eTims platform, taxpayers can pay their taxes using mobile money, debit or credit card, or through the bank.
This is after they have registered by visiting the Kenya Revenue Authority website.
Businesses previously required to use eTims
Before the announcement, the taxman required three groups of people to use eTims software in their dealings with the taxman.
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VAT registered taxpayers who were yet to be onboarded or were facing challenges while integrating TIMS ETR devices were included in the categories specified by the revenue authority.
Further, the other category was the taxpayers who deal in bulk invoicing and therefore face capacity or performance issues with invoice transmission.
Also, VAT registered taxpayers facing challenges integrating with TIMS ETR devices were required to use the eTims platform.
