HISTORY OF ETR | IMPLIMENTATION OF TIMS
Upgraded Electronic Tax Registers (ETRs)
History of ETR
ETRs were first rolled out in Kenya
in the year 2005 as a means of streamlining the collection of VAT and to
minimize instances of tax evasion. The ETR is a cash register with fiscal
memory that keeps a record of all transactions for purposes of the trader
accounting for VAT charged at the time of making a sale. Other fiscalized
electronic devices that have been used by traders over the years include
Electronic Fiscal Printers (EFPs) and Electronic Signature Devices (ESDs).
Over the years, Kenya Revenue Authority (KRA) has
embraced automation with the aim of improving service delivery. As a result, in
September 2020, the Cabinet Secretary Treasury gazetted The VAT (Electronic
Tax Invoice Regulations), 2020 that
introduced the implementation of the Electronic Tax Invoice
What is this Electronic Tax Invoice? Is it
different from the current ETR?
Essentially, and as per the VAT Electronic Tax Invoice Regulations 2020, you and other VAT registered taxpayers will be required to upgrade your ETR in order to comply with the requirements set out in the Regulations. The upgraded ETRs have the ability to check the accuracy of the invoice data generated at the time of making a sale through a validation process. As the customer is issued with their copy of the invoice, the electronic version of the tax invoice is transmitted to KRA over the internet on a real time or near real time basis.
Through this implementation of the electronic
tax invoice, VAT will be accounted for at the point of issuing the invoice,
since the data will be transmitted to KRA.
The management of these upgraded ETRs is being done
through the Tax Invoice Management System (TIMS). The system is expected to have a positive impact on VAT administration
as the overall objective is to increase VAT compliance, minimize on VAT fraud
and increase tax revenue
How do you Comply?
KRA has issued guidelines on how to comply. Since its roll out on 1st August 2021, taxpayers were issued with a
12-month transition period to ensure any emerging issues are resolved. All VAT
registered taxpayers are required to comply by 31st July 2022.
Why Should the General Public Care? I don’t have a
VAT obligation…
While you may not account for VAT,
VAT is a consumption tax charged on taxable supplies. As such, we all pay VAT
for the goods and services we consume on a daily basis. VAT is therefore a
critical source of revenue for Government. Additionally, citizens ought to be
concerned with the utilization of the taxes they pay. One of the features in
the Electronic Tax Invoice is the QR code that enables you the customer to
confirm the validity of the invoices/receipts issued to you by the trader.
What this means is that you can verify that the VAT
you pay has been duly remitted to KRA and by extension you have played your
role in nation building.
Do I need to replace my Current ETR?
Some of the recent models of the ETRs
can be upgraded as long as they meet the technical specifications and
functionality required. However, for those that cannot be reconfigured , the
VAT trader will be required to replace their current ETR with one that supports
the generation of the electronic tax invoice.
In the event you have to replace your
ETR, you are advised to safe guard the previously used ETR in line with the
requirement to keep records for five (5) years; Sec 23 of the Tax Procedures
Act, 2015.
What are the benefits?
1.
Simplified return filing through the
pre-filled VAT return
2.
Automated activation of the ETR
3.
It is a solution to the VAT Auto
Assessments (VAA) process
4.
The ability to confirm the validity
of a tax invoice through the invoice number checker on the iTax portal or by
scanning the QR Code
5.
Faster processing of VAT Refunds by
KRA for businesses
6.
Trade facilitation by levelling the
playing field in term of taxation – All business ought to pay their fair share
of tax.
For more information, you can visit the KRA Website for Frequently Asked Questions.
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