It has been an interesting past year or so for the Kenya Revenue Authority, which has gradually strengthened its revenue collection methods to nab tax cheat and enforce tough measures that ensure tax compliance.
Technology is playing a key role for them, evident from the setting up of iWhistle- a website for reporting tax evaders- and even creating a team dedicated to scrutinizing the lifestyles of Kenyans on social media.
Traders are the latest on KRA’s plate as the taxman starts implementing a new electronic register meant to capture and relay all transactions from a trader to KRA instantaneously.
The Electronic Tax Registers (ETRs) machines that traders have been using are not compliant with the Tax Invoice Management System (TIMS), an upgrade done as of August 2021. The enactment of TIMS is supposed to be complete for all traders by July next year, and it is the system that will push transactions such as invoices direct to KRA.
“The current ETR does not enable any data to be sent to iTax. You have to do a CSV file (file format that is not fully standardized) and do a self-assessment. But here there will be the real-time transmission of data directly to iTax at the touch of a button,” Samuel Mwaura, a partner in charge of taxation services at Grant Thornton audit firm.
The old e-tax registers have serious technological shortcomings, with reports of people tampering with them to even generate fake invoices that cheat KRA out of billions in tax revenue. Suppliers of these ETR machines have been told to cease giving out any registers not compliant with the upgrade by January 15th, 2022.
In this regard, KRA will no longer issue approval letters of purchase of non-TIMS compliant ETR to newly VAT registered taxpayers or taxpayers intending to replace their existing ETRs,” said KRA in a notice.
Failure to comply with these new regulations will attract a fine not exceeding 1 million, or imprisonment for a term not exceeding three years, or both.
