The government has finalized new reforms guiding tax regulations implemented by the 2023 Finance Act.
With the introduction of the 16 per cent tax on VAT, Sections of tax regulations touching on mandatory eTIMS onboarding had to be reformed in the Tax Procedures Act.
After six months of public evaluation and public participation, four major reforms were approved.
Small-scale businesses with a turnover below Ksh5 million per annum are among the biggest beneficiaries as they will only be required to show transaction records rather than generate electronic invoices.
The traders have thus been exempted from providing eTIMS-generated invoices.
Small-scale traders had complained that they would incur extra costs and also struggle to adapt to the high-tech technology.
Business owners moving forward will not be required to capture their stock levels in the system.
Non-resident persons without a permanent establishment in Kenya have also been exempted from eTIMS services.
However, resident persons with withholding tax as the final tax have also been excluded from the generation of eTIMS services.
These regulations guide the implementation of the Finance Act 2023 which took effect on July 1.
This reform comes a week after all businesses operating in Kenya and are registered for a turnover even if they are not registered for a VAT were expected to be onboarded in the system by January 1.
However, the Kenya Revenue Authority (KRA) clarified that less than one per cent which is about 6,000 of the businesses in the country had done so pushing them to extend the onboarding process further.
“The change aspect of this implementation is that they need to use the technology for tax purposes and just knowing that the taxman can see your transaction as you work day-by-day is a bit uncomfortable for some, but with technology again that’s the direction most businesses have gone,” eTIMS Chief Manager Hakamba Wangwe stated on January 10.
With this, they have pushed the deadline for business onboarding to March 2024, targeting to capture all businesses in the country.
