Kenya Revenue Authority (KRA) has urged businesses, including those not registered for VAT, to register to electronically generate and transmit their invoices to KRA via eTIMS.

This is based on the amended Finance Act 2023 that put the compliance deadline on September 1, 2023 with KRA set to start implementing the law strictly on January 1, 2024.

According to a notice from the taxman, any business expenditure which will not have a valid electronic tax invoice will not be deductible for income tax purposes from January 1, 2024.

“We would like to remind the public that starting September 1, 2023, all businesses, including those not registered for VAT, must electronically generate and transmit their invoices to KRA through the eTIMS platform,” stated KRA.

However, KRA has given all businesses until March 31, 2024 to adjust to the new obligation to enlist on eTIMS platform after which they will be heftily penalized for failing to comply.

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“To support businesses and allow time for adjustments, onboarding to eTIMS for non-VAT registered taxpayers will be available until March 31, 2024. Penalties won’t be imposed during this onboarding period,” said the notice from the KRA Commissioner for Domestic Taxes.

KRA clarified that non-VAT registered taxpayers will not be penalized if they join the platform during the onboarding phase to ease transition to the new electronic tax invoice system.

“Once onboarded, taxpayers must progressively input manually generated invoices and receipts issued after January 1, 2024, up to the onboarding date, onto the KRA system. This ensures a comprehensive record of transactions,” added the revenue authority.

The authority pledged to continue conducting public awareness on the new requisite and seek avenues to simplify the process and ensure taxpayers comply going into the future.

“We are committed to continue supporting and facilitating all taxpayers to comply with the requirements of the law by conducting comprehensive stakeholder engagements, awareness campaigns, taxpayer education, and availing varied solutions including simplified solutions that cater to the various taxpayer segments,” KRA concluded.

This comes amid confusion over the implementation of the new requirement, readiness of many small business to comply with it as well as which businesses are required to comply with it and which ones are exempted.