Implementation of the Tax Invoice Management System in Kenya

published on 25 April 2022 | reading time approx. 2 minutes

The Kenya Revenue Authority (KRA) is in the process of rolling out the Tax Invoice Management System (TIMS) in line with Legal Notice No. 189 on Electronic Tax Registers (ETRs) Regulations.

Who is eligible to comply?

The Law requires that traders/businesses with an annual turnover or who expect to make an annual turnover of at least KShs 5 million register for Value Added Tax (VAT).

 
Requirements for Value Added Tax registered taxpayers  

TIMS will require traders/businesses registered for VAT obligation to install ETRs connected to the KRA online system (iTax). This therefore means that traders/businesses will be required to acquire new ETR machines which will be capable of validating invoice data and transmitting the same to iTax on a real time basis. The current ETR machines are manual hence the KRA does not have direct visibility on invoice data in real time. 
 
ETRs will have to be connected to the internet at all times since transmission will be done in real time. In the event of internet disruption, traders are advised to continue with their operations given that invoice validation does not require internet connection. Internet connection is only required for invoice transmission which means that once internet connection is restored, the invoice/s generated during the interruption period will be immediately transmitted to KRA.
   

Implementation date  

The KRA through a Public Notice, issued an extension of time to comply with the Regulations. The Public Notice indicated that the commencement date of the electronic tax invoice Regulations was on 1st August 2021, after which the taxpayers were required to comply with the Regulations within 12 months of its commencement. The Notice was issued in July 2021 thus VAT registered taxpayers ought to comply before 31 July 2022.
 

Challenges in implementation

In the event that a registered person will be unable to comply within these timelines, the person shall apply to the Commissioner of Domestic Taxes for extension of time to comply, which shall not exceed six months. The application for extension should be made at least thirty days before expiry of the specified period of 12 months, i.e., before 30 June 2022.
 

Conclusion

If you have any specific queries or require further advisory on the implications of the above regulations and specific impacts on your business, please contact us.