Kenya Revenue Authority (KRA) insists that July 31 remains the deadline for the shift to the new Tax Invoice Management System (TIMS) as it plans to increase collections through the system by capture data in real time.

The new regulations outlined by the taxman requires all taxpayers registered for Value Added Tax (VAT) maintain a tax register that can transmit tax invoice data to the KRA system in a real time or near real time basis.

Kenyan business people had until July to install the new KRA-approved devices which cost between Sh45,000 to Sh 120,000 and an additional Sh80,000 for the software.

Traders who fail to comply by July 1, risk a Sh1 million fine or three years in jail time.

New gadgets

“All VAT registered taxpayers are required to have in place of the new electronic tax registers by July 31, 2022 and generate validated and electronically transmitted tax invoices in compliance with the VAT regulations of 2020,” KRA said in the statement.

The move is expected to increase revenue collections  further after the taxman posted a record Sh2.03 trillion in revenues during the Financial Year (FY) 2021/22.

This as prices of commodities most of which are subject to either excise duty or import levy increased, but plans are in place to expand the tax base further, by deepening collection strategies.

The taxman is confident of collecting an even higher target of Sh6.831 trillion under the corporate plan targets by 2023/24 FY.

Analysts opinion

Deloitte Consulting says the key objective of the new TIMS is to foster tax compliance and minimise tax revenue leakage.

To achieve this, TIMS will be integrated with the KRA system to allow efficient transmission of tax invoice data to the KRA system. In fact, the regulations envisage real time transmission of invoice data to the revenue authority as well as a daily summary.

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, either as an independent or integrated component for seamless invoice data transmission.