The government has set a Sh1 million penalty for those who fail to comply by July 31. Traders had a two-year window period to shift.
Early this week, Kenya Revenue Authority (KRA) reminded eligible remitters of Value Added Tax (VAT) to prepare for the new Tax Invoice Management System (TIMS), an upgrade of the Electronic Tax Registers (ETR) currently in use.
"All VAT-registered taxpayers are required to have in place the new Tax Invoice Management System (TIMS) by July 31,'' KRA said in a public notice published in local dailies.
This has sent jitters among traders who are yet to purchase the necessary machines and align software estimated to cost close to Sh150,000.
A mobile phone accessories dealer along Thika Road in Nairobi told this writer that the shift comes at a high cost.
''I make less than Sh50,000 in profit every month. Subjecting me to a Sh150,000 one-off cost is quite taxing. I need to revise commodity prices upwards to protect my margins,'' he said.
His neighbour dealing in distribution of tents and Public Address System said she has already complied with KRA's new rule and this cost her close to Sh170,000.
''I have been hiring a chair at Sh3 more since last year to cover the cost. It is costly but we have no option,'' she said.
KRA says the new system will ensure real-time transmission of data to its digital system and iTax as it moves to seal tax evasion loopholes.
Taxpayers will also be required to keep and safeguard the data in the previously used Electronic Tax Registers (ETR) as the law requires them to keep the record for five years.
On 25 September 2020, the Cabinet Secretary for The National Treasury Ukur Yatani gazetted the Value Added Tax (VAT) (Electronic Tax Invoice) Regulations, 2020 to usher in a new electronic tax invoice regime.
The regulations took effect on gazettement and required VAT registered persons to comply within 12 months therefrom.
Although KRA issued a public notice citing its intention to roll out the new electronic tax invoice requirements commencing August last year, the public notice provided a further twelve-month transition window from the rollout date for taxpayers to comply.
To ensure integration of the tax register with the KRA system, every registered taxpayer is required to procure a control unit, being either a point-of-sale terminal, an Enterprise Resource Planning (ERP) system, or simply an ETR.
The revenue man had given suppliers of ETR until mid-January to adopt the new ETR machines that are configured for real-time transmission of data to the taxman’s register.
Last year, KRA exceeded its collection target for the first time in 11 years, a move attributed to the adoption of technology.
The revenue agency collected Sh2.03 trillion during the financial year under review, against an original target of Sh1.88 trillion and two revised targets of Sh1.91 trillion and Sh1.97 trillion respectively.
This was a 22.3 per cent improvement in revenue collection compared to the previous financial year when it collected a total of Sh1.66 trillion.
Value Added Tax collections amounted to Sh244.7 billion, reflecting a growth of 24 per cent. The performance is primarily attributable to enhanced compliance efforts by KRA and the economic recovery.
