The government has announced that Pay bills will be classified as virtual electronic tax receipt systems.
Senior Government Advisor Moses Kuria has said that the decision has been made to implement the move by December 25, 2024, to broaden the tax base.
Further, Kuria explained that the decision was driven by the significant gap between the number of Kenya Revenue Authority (KRA) registered Electronic Tax Registers (ETRs).
“We have agreed that all those pay bills, come Christmas 2024, will be virtual ETRs for KRA,” stated Kuria.
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Why Pay Bills will be Linked to KRA
According to him, the government can have access to over 2 million digital payment touchpoints across the country through Banks and Telcos, confirming that the Kenya Revenue Authority (KRA) is fully aligned with the plan.
“Because the base and will is there, we are now going to implement the pay bills and till numbers. The people who have devices for VAT, the ETR, are only 200,000,”
“If you combined, all our banks doing mobile money and telcos, we have 2 million digital touchpoints. That is 10 times the number of ETRs at KRA. That speaks to the huge opportunity Kenya has to ensure the early harvest of digital tax,” he explained.
Additionally, the government advisor argued that while digitization of payments has proven to be a huge task in other countries, even the uneducated in Kenya have been able to navigate it.
“We have decided that there will be nowhere to hide for anybody. We have already a huge advantage because of the huge digitization of payment.
“Kenya is the only country where someone who has never gone to school or cannot construct a sentence in English can make digital payments through Mpesa,” he added.
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What are ETRs and Why are they Used?
ETRs were first rolled out in 2005 to streamline the collection of VAT and to minimize instances of tax evasion.
The ETR is a cash register with fiscal memory that keeps a record of all transactions for traders accounting of VAT charged at the time of making a sale.
However, in September 2020, the Cabinet Secretary Treasury gazetted The VAT (Electronic Tax Invoice Regulations), 2020 which introduced the implementation of the Electronic Tax Invoice.
The upgraded ETRs can check the accuracy of the invoice data generated at the time of making a sale through a validation process.
“As the customer is issued with their copy of the invoice, the electronic version of the tax invoice is transmitted to KRA over the internet on a real-time or near real-time basis,” KRA notes on its website.
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