As Kenya embarks on a transformative journey towards digital taxation, the Kenya Revenue Authority (KRA) introduced the Electronic Tax Invoice Management System (eTIMS).
This innovative software solution aims to simplify, streamline, and enhance the country’s tax invoicing process. The shift is not just a regulatory change but a step towards modernising Kenya’s economy, fostering transparency, and ensuring tax compliance across all sectors.
eTIMS offers a user-friendly interface that allows taxpayers to generate and manage electronic tax invoices effortlessly. However, the success of this system hinges on the active participation of consumers. For effective implementation, Kenyans must begin to insist on receiving electronic receipts for every transaction.
The law now requires that any business expense claim must be supported by an electronic tax invoice. Therefore, all individuals and entities engaged in business activities in Kenya must adopt eTIMS. This includes a wide array of participants, from large corporations to small-scale traders in the informal sector, regardless of their VAT registration status.
Entities obligated to onboard eTIMS encompass companies, partnerships, sole proprietorships, associations, trusts, and individuals with various income tax obligations. This broad mandate covers income sources such as monthly rental income, turnover tax, and annual income tax for both residents and non-residents.
Before choosing what eTIMS solution to apply for your business, let us first learn what categories of businesses are outlined by KRA.
Broad-Based Application
The categories of businesses required to implement eTIMS span diverse sectors:
1. Business-to-Business (B2B): Manufacturing companies, wholesale suppliers, and service providers catering to corporate clients.
2. Business-to-Consumer (B2C): Retail stores, restaurants, and online retailers.
3. Small Businesses and Traders: Farmers, local artisans, and small-scale service providers such as plumbers and electricians.
Consumers play a crucial role in ensuring the efficacy of the electronic tax system. By asking for eTIMS receipts, Kenyans not only contribute to a fairer tax system but also benefit in several ways. Valid eTIMS receipts ensure that everyone pays their fair share of taxes, help establish the legitimacy of financial transactions, and safeguard against fraud.
In order to cater to every business in the tax landscape, businesses are presented with a suite of solutions under the Electronic Tax Invoice Management System (eTIMS). Each solution is tailored to specific business needs, ensuring seamless integration and compliance.
Here's a breakdown of the available solutions and their applicability to different business contexts:
1. eTIMS Lite (Web): Accessible via eCitizen, this web-based solution is ideal for businesses with minimal transactions, offering a straightforward interface for invoice management.
2. eTIMS Lite (USSD): Utilising the short code *222#, this solution caters to individuals and sole proprietors, providing a convenient platform for invoice generation and transmission.
3. Online Portal: Tailored exclusively for taxpayers in the service sector, this portal streamlines invoicing for businesses where no physical goods are involved in transactions.
4. eTIMS Client: Designed as downloadable software, eTIMS Client caters to taxpayers dealing in goods or both goods and services. It supports multiple branches and cashier tills, offering flexibility in managing transactions.
5. Virtual Sales Control Unit (VSCU): Enabling seamless integration between invoicing/ERP systems and eTIMS, VSCU is ideal for businesses with extensive transactions or bulk invoicing requirements.
6. Online Sales Control Unit (OSCU): Similar to VSCU, OSCU facilitates system-to-system integration for taxpayers using online invoicing systems, ensuring efficient transmission of invoice data to eTIMS.
One of the primary benefits of eTIMS is the ease of filing returns, which is facilitated by the transmission of invoices to the Kenya Revenue Authority (KRA).
The transmission process varies for each solution:
For eTIMS Lite (Web- ecitizen.kra.go.ke ), need to stay online for invoice details to be transmitted automatically.
The eTIMS portal (etims.kra.go.ke) automatically transmits invoice details for users staying online.
eTIMS Client allows offline users to generate invoices, which are transmitted once an internet connection is established.
USSD users (*222#) can generate and transmit invoices for a nominal fee of Ksh 1, ensuring compliance without the need for airtime.
Steps to Generate an eTIMS Invoice
For businesses new to eTIMS, generating an electronic invoice on eCitizen involves a straightforward process:
1. Log in to eCitizen and click on Sales to raise an invoice.
2. Click on Invoice and select whether it’s a Business-to-Business or Business-to-Customer transaction.
3. Create or select a customer by adding their details. If the KRA PIN is valid, customer details will auto-populate.
4. Add items to the invoice, including product/service details, unit cost, and quantity.
5. Review and confirm all invoice details.
6. Save and send the invoice either by downloading it or emailing it directly to the client.