The Kenya Revenue Authority (KRA) has set a new deadline for implementing a new computerized register that collects and delivers all transactions, particularly invoices, to the taxman in real time. Suppliers of Electronic Tax Registers (ETR) have until January 15, 2022 to adopt new ETR machines that are equipped for real-time data transfer to the taxman’s register, according to KRA’s most recent notification.
“The Kenya Revenue Authority (KRA) wishes to notify all VAT registered taxpayers and the public that the new Electronic Tax Registers (ETRs) that are compliant with the Tax Invoice Management System (TIMS) are now subject to an automated activation process through the iTax System. In this regard, KRA will no longer issue approval letters for the purchase of non TIMS compliant ETRs to newly VAT registered taxpayers or taxpayers intending to replace their existing ETRs.
Consequently, suppliers of ETRs are notified to cease supply of Electronic Tax Registers that are not compliant with the Value Added Tax (Electronic Tax Invoice) Regulations, 2020 effective 15th January 2022,” the authority said in a statement.
Here Is What You Need To Know
- 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.
- The earlier deadline announced by KRA was August 2022, but this seems to have been overtaken by events.
- 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.
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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.
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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.
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