Treasury Cabinet Secretary Njuguna Ndungu, on Thursday, published the Tax Procedures (Electronic Tax Invoice) Regulations and the Income Tax (Turnover Tax) Regulations, 2023, which target businesses in the country.
In the draft regulations, the Kenya Revenue Authority (KRA) will be able to monitor businesses' inventory.
Notably, all businesses will be required to capture all their items sold, including specifying whether the stock was procured locally or imported.
"The taxpayer shall notify the Commissioner in writing within 30 days before the closure of business indicating records of current stock.
"In case there is transfer of stock upon closure of business, the taxpayer shall notify the Commissioner in writing the stock, quantity and their levels," read the regulations in part.
On the other hand, invoices will also be generated on the system. The invoices will also need to bear the KRA PIN of the registered system user, the time and date of issuance, and the serial number of the invoice.
The buyer’s KRA PIN or details identifying the buyer, the total gross amount, and the total tax amount will also be indicated.
"A person commits an offence if the person fails to comply with any provisions of these regulations or tampers, manipulates or interferes with the proper functioning of the system including uninstallation and change of the device without notifying the Commissioner," read the regulations in part.
Income Tax (Turnover Tax) Regulations
Under the new regulations, businesses with an annual income between Ksh1 million to Ksh25 million will be liable to a turnover tax which is set at 3 per cent.
Those exempted from these provisions include those with rental income, those with withholding tax as a final tax, and money generated from professional and training fees.
"Where the income from the business of a person registered under Regulation 7 exceeds Ksh25 million during a year of income, that person shall notify the Commissioner of the change of status," read the proposals in part.
Late filing of the tax returns attracts a penalty of Ksh1,000 per month, while delays in paying the tax attract a penalty of 5 per cent of the due tax.
Kenyans have been asked to submit their comments on the draft regulations to KRA by December 8.
