The Kenya Revenue Authority (KRA) has loosened its grip on the electronic tax invoice (e-invoice) mandate, offering businesses facing challenges in adhering to the existing electronic invoice tax management system (eTIMS) a chance to tailor-make their systems for recording tax data.

This shift comes after initial rigidity sparked concerns for high-volume businesses like supermarkets and petrol stations, struggling to comply with the full e-invoice requirements.

Previously, the Tax Procedures (Electronic Tax Invoice) Regulations, 2023, demanded all business-to-business transactions be backed by an e-invoice generated through the e-Tims platform.

However, the new regulations introduce a clause allowing businesses to apply for an exemption if they can demonstrate an alternative automated method for tax data recording and transmission.

Hakamba Wangwe, the KRA Chief Manager overseeing the electronic Tax Invoice Management System (e-Tims), emphasized the importance of achieving visibility for the taxman in the process

Read More

  1. KRA, KNCCI partner to boost MSME tax compliance and sustainable practices
  2. Slow onboarding for Kenya Revenue Authority eTIMS system raises concerns
  3. Landlords, employees expected to remit Affordable Housing Levy from Thursday

“A person who is required to issue an electronic tax invoice may, with reasons, apply to the Commissioner in writing to be exempted from the requirements of these Regulations where … an alternative automated method for recording, storing and transmitting the data relating to the transactions to the Commissioner is available and upon recommendation by the relevant authority,” Wangwe stated.

This flexibility is particularly welcome for high-traffic businesses, often unable to include all buyer details within the e-Tims format.

Supermarkets, for example, can now explore alternative systems that capture essential tax data without bogging down transactions.

Businesses with a turnover below Sh5 million are no longer obligated to use e-invoices, a significant relief for Kenya's vast micro-business sector, including farmers.

However, these businesses are still subject to the proposed 5 per cent withholding tax on produce sales to cooperatives and agro-processors, as outlined in the Medium Term Revenue Strategy 2023.

While the e-invoice mandate remains in place for most businesses, the option for tailor-made systems marks a significant shift in the KRA's approach.

This move reflects a growing recognition of the diverse needs within Kenya's business landscape and could pave the way for a more collaborative tax environment.

With the e-invoice door now slightly ajar, it will be interesting to see how businesses respond.

Will they embrace the DIY approach, or stick with the familiar e-Tims platform? Only time will tell if this newfound flexibility will usher in a new era of tax compliance in Kenya.