The Kenya Revenue Authority (KRA) is facing challenges in its efforts to get businesses to adopt the new Electronic Tax Invoice Management System (eTIMS).

While KRA initially anticipated onboarding over 900,000 businesses, only 49 per cent of the 236,000 registered businesses were actively using the system by the March 31, 2024 deadline.

This number falls far short of expectations, considering the Kenya National Bureau of Statistics (KNBS) reports over 7 million businesses operating in the country.

KRA's electronic tax invoice management chief manager, Hakamba Wangwe, suggests enforcing penalties to ensure compliance.

However, Wangwe also acknowledges that many businesses are still onboarding through USSD codes, the eCitizen web application, and a new mobile app.

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This raises concerns about the low activation rate among larger businesses already registered on the eTIMS platform.

The eTIMS system, originally intended for rollout in January 2024, was postponed to April 1, 2024. KRA aims to leverage this system for better visibility into businesses' VAT claims.

This initiative is part of a broader strategy to expand the tax net, which has included unsuccessful attempts to register farmers in the wake of public backlash.

Businesses Cite Onboarding Hurdles

Several factors are contributing to the low adoption rate. V

A hardware vendor, explains that many of her business partners are not yet registered.

Others, like a second-hand car dealer, find the registration process cumbersome and knowledge requirements excessive.

A small eatery owner considers eTIMS micromanagement and unnecessary for his business model.

He fears the additional cost of hiring someone solely to generate invoices for sales to other businesses.

A doctor raised concerns about the system's inability to account for unpaid consultations, an issue they are addressing through their professional organization.

KRA Needs to Bridge the Gap

The onus now falls on KRA to address these concerns and promote the benefits of taxpaying.

A significant portion of the population remains outside the tax bracket due to a lack of understanding and trust in the system.

Many Kenyans witness public funds misused and question the value of paying taxes, especially in neglected rural areas.

KRA needs to improve tax education, facilitate easier compliance, and prioritize positive reinforcement over punishment.

Focusing resources on large-scale tax evaders who owe billions, while celebrating the efforts of new, small taxpayers, could be a more effective approach.