The Kenya Revenue Authority (KRA) has given businesses until August 2022 to install new electronic tax registers, also known as ETR machines, that are connected to its computers for daily sales monitoring. ETR machines are required by law for all enterprises with an annual turnover of at least Ksh5 million ($46k) in order to keep track of daily sales and tax returns.
“Kenya Revenue Authority wishes to inform the public that the rollout of the Electronic Tax Invoice pursuant to the provisions of the Value-Added Tax (Electronic Tax Invoice) Regulations 2020 shall commence on August 1, 2022,” said KRA in a statement.
Here Is What You Need To Know
- Businesses were given until September 2021 to comply with the regulation, which was issued in October 2020, even as the IRS tightens its grip on tax defaulters.
“All VAT registered taxpayers shall thereafter be required to comply with the requirements of the regulations on implementation of the Electronic Tax Invoice within a period of 12 months from the date of the rollout. Where a person is unable to comply within the timelines, they shall apply to the Commissioner Domestic Taxes for extension of time to comply which shall not exceed six months as provided for in the regulations,” added KRA.
- Businesses will also have to obtain authorization to use the machines outside of the designated area, or risk being locked out.
Kenya’s New Digital Service Tax Regime
Businesses in Kenya and consumers in Kenya started paying digital tax for transactions conducted on the internet-based platforms such Google, Amazon, Jumia and other online platforms from January 1, 2021. This followed the gazetting of the country’s Digital Marketplace Supply Regulations, 2020, by the National Treasury Cabinet Secretary Ukur Yatani.
Read also:‘Big Business and Small Business Need Each Other Now More Than Ever’
The new 1.5% ‘Digital Service Tax’ imposed on the gross transaction value of services is due at the time of payment.
Additionally, under Kenya’s new 2020 Value Added Tax (Digital Market Supply) Regulations, digital marketplaces (ecommerce websites) that fail to pay Value Added Tax (at 14%) pursuant Section 5(8) of the country’s Value Added Tax Act, 2013 shall, in addition to the penalties prescribed under the law, be liable to restriction of access to their websites in Kenya until such tax is paid.
With these regulations, Kenyan Revenue Authority (KRA) is targeting ecommerce platforms with taxes to fund the Sh3 trillion ($28 billion) 2020/2021 budget.
Kenya tax machines Kenya tax machines
Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based lawyer who has advised startups across Africa on issues such as startup funding (Venture Capital, Debt financing, private equity, angel investing etc), taxation, strategies, etc. He also has special focus on the protection of business or brands’ intellectual property rights ( such as trademark, patent or design) across Africa and other foreign jurisdictions.
He is well versed on issues of ESG (sustainability), media and entertainment law, corporate finance and governance.
He is also an award-winning writer