Kenya Revenue Authority (KRA) has introduced the electronic Tax Invoice Management System (eTIMs), an upgraded version of the Tax Invoice Management System that allows taxpayers to transmit tax invoices on a real-time basis using mobile phone apps or other electronic devices. The software is free for business owners and aims to reduce the cost of compliance for VAT-registered businesses by providing accurate tax invoice declarations and reconciliation between filed returns and payments.
The eTIMs solution targets small, medium and large-scale taxpayers to achieve maximum compliance with the VAT Act of 2013 and the VAT (Electronic Tax Invoice) Regulations 2020. The mobile app is designed for small traders, while other options include eTIMS Client (desktop/laptop version), and Virtual Sales Control Unit (VSCU) for taxpayers with invoicing systems (ERPs) that can integrate into the VSCU via API or third-party integrators.
The rollout of the upgraded system has entered the second phase and will be gradually done. Currently, eTIMS targets traders who were unable to purchase the upgraded Electronic Tax Registers. KRA seeks to regulate business transactions based on the VAT Act of 2013 and the VAT (Electronic Tax Invoice) Regulations 2020.
KRA’s acting commissioner-general Rispah Simiyu stated that the objective of eTIMS is to reduce the VAT gap and start on the journey towards the pre-filled return. The software tool has been successfully implemented in Rwanda, leading to an increase in Value Added Tax (VAT) revenue. Currently, Kenya’s tax to Gross Domestic Product (GDP) ratio is at 15.3% with VAT accounting for 4%, while Rwanda’s tax to GDP ratio is 16.9% with VAT accounting for 7%.
The eTIMs system is expected to increase VAT collection by 35% and boost tax compliance among small businesses. Taxpayers can access eTIMS through various channels such as online portals, applications they can download and install on their mobile phones or tablets, client versions that can be installed on desktops or laptops, and applications that facilitate integration with businesses that prefer their existing billing system.
In conclusion, the eTIMs system is an innovative solution that simplifies the tax invoicing process for taxpayers and enhances tax compliance for businesses. The mobile app is particularly useful for small traders who can transmit invoices in real-time using their smartphones.
