eTiMS registration: Eastleigh small scale traders decry 'complicated' system

eTiMS registration remains an unfamiliar and daunting topic for many small-scale traders in Eastleigh, a key business area in Nairobi, who say they do not understand it, how it works, and the technical complexities that come with signing up for it.

The Electronic Tax Invoice Management System was introduced by the government to enhance tax compliance by businesses, particularly focusing on reducing tax evasion and improving revenue collection efficiency.

It requires businesses to electronically generate and submit invoices to tax authorities and provides real-time visibility and verification of transactions, all in efforts to streamline tax administration, curb fraud, and promote transparency in business transactions.

However, its implementation has posed challenges for small-scale traders, especially those in the informal sector, due to technological requirements, compliance costs, and the learning curve associated with adopting new digital processes.

Asked about the eTiMS registration on Monday, several traders said they were anxious and frustrated by the registration process and fearful they would lose more money in the form of taxes.

They think eTiMS is an additional tax, but the KRA noted via X on March 29 that "eTiMS is not a new tax", but "a system designed to ensure tax compliance and streamline the invoicing process."

"eTiMS is the system to make it easier for taxpayers to comply with payment of taxes," George Obell, the deputy commissioner of the medium taxpayers' office, said in a video post.

eTiMS is not a new tax, it is a system designed to ensure tax compliance and streamline the invoicing process.

Here are some four key benefits that eTiMS gives you.

All businesses are required to register on eTiMS by 31st March, 2024

Learn more on the various solutions here… pic.twitter.com/lq2h7PGr49

— KRA Care (@KRACare) March 29, 2024

Sensitisation important

Traders in Eastleigh, like fruit vendor John Nduati, stressed the need to educate the masses about the system and its implications, and a grace period for traders to adapt to the new system, "otherwise, it’s just another nail in the coffin for us small traders.”

“I’m not sure how the eTiMS works or what it’s about, and with this business barely sustaining us, I can’t imagine paying more," he told The Eastleigh Voice on Monday.

He added, “If I register my small business, and I’m not computer literate, it means I have to pay someone to help me monitor and do the work. If I can’t sustain my family with what I earn, how will I manage to pay someone to help with filing those details and tracking?”

John Nduati, a fruit vendor in Eastleigh, Nairobi, during an interview on May 20, 2024. (Photo: Hafsa Hassan)

Loice Mwikali, a vegetable vendor, is a trader who would benefit from the sensitisation.

While also admitting that she did not understand the tax system, she said she was afraid the taxes would eat into her income.

“I don’t understand how eTiMS works. My sales have already plummeted so much that more taxes will send me back home,” she said, adding she ends up with a significant quantity of unsold vegetables every day.

“The government needs to understand that we run small businesses just to survive and educate our children. It feels like they want us to go back home and start begging.”

Mwikali added that if strict monitoring were enforced, matters would get worse.

“A penalty of Sh2 million means they want us to close down our businesses and starve," she said, and urged the government not to overburden small traders since they have created these opportunities themselves in the absence of government-provided jobs.

Loise Mwikali, a vegetable vendor in Eastleigh, Nairobi, during an interview on May 20, 2024. (Photo: Hafsa Hassan)

Merceline Njoki, an elderly woman running a food kiosk, also said she did not comprehend the system and demonstrated the same need for education on eTiMS.

"Since COVID, people can barely afford food. The few customers who come aren't enough to sustain us. We plead with the government not to kill our businesses."

Mohammad Abdi, a cereal and vegetable vendor, said his struggle with enrolling in the eTiMS stemmed from its technical complexities.

“Adopting something you don't understand is extremely difficult. We're already facing harassment in our business. We ask the government to be patient with us, considering that all these taxes eventually come back to us to pay,” he said.

Merceline Njoki is pictured in her kiosk in Eastleigh, Nairobi, during an interview on May 20, 2024. (Photo: Hafsa Hassan)

How to register for eTiMS

One option is to dial *222# and follow the prompts while another is to use the eCitizen platform or the Kenya Revenue Authority's (KRA) eTiMS portal.

Upon logging in via the KRA portal, these are the steps to follow, as indicated by the KRA:

Sign up on the eTiMS Taxpayer Portal via etims.kra.go.ke

Click on the Sign-Up button and input your PIN.

A One Time Password (OTP) will be sent to your iTax-registered mobile number.

Input the OTP sent to your iTax registered mobile number on the sign-up page and you will be prompted to create a password for your profile to complete the sign-up process.

Log in to the eTiMS taxpayer portal using your user ID (KRA PIN) and the password created during sign-up.

Click on the Service Request button to select your preferred eTiMS software solution listed under the “eTiMS Type” menu

Upload the following documents: a copy of the National ID of at least one of the directors for companies, at least one of the partners for partnerships, and the business owner for sole proprietorships; a duly filled out commitment form, which is accessible on the KRA website (click on Publications, then click on eTiMS and search for the eTiMS Acknowledgement & Commitment Form)

Submit your application to complete the onboarding process.

Upon onboarding and registration, an authorised KRA officer will verify the application and approve it.

One can then install and configure the eTiMS software on the preferred device. According to the KRA website, eTiMS can be installed on Windows-based computers and laptops, Android smartphones, tablets, and personal digital assistant (PDA) devices.

The taxman says that for self-installation, one can access the user guides on its website and how-to videos on its KRA YouTube channel

Another option is to visit the nearest KRA office for assistance or a cyber cafe, where a small fee is charged.

Did you know that there are 6 ways to register on eTiMS?

Scroll through to see what suits you.👇

Feel free to call us on 0709 012 730 or 0709 012 735 for assistance.

For more information on eTiMS click here; https://t.co/7sHw3LCt41 #VukaeTiMS #KRAeTiMS pic.twitter.com/d47rYv6Isx

— KRA Care (@KRACare) February 19, 2024

"Punitive measure"

Meanwhile, the Kenya National Chamber of Commerce and Industry (KNCCI) has criticised the proposed penalty of Sh2 million per month for non-compliance with eTiMS, outlined in the Finance Bill 2024.

In an official statement, the KNCCI expressed concern over what it termed an overly punitive measure, warning of potential negative impacts on micro, small, and medium enterprises (MSMEs), crucial contributors to Kenya's economy.

"The proposed penalty could have dire consequences for smaller enterprises, potentially leading to closures and significant job losses," the agency warned.

Highlighting the MSMEs' role in driving economic growth, contributing around 40 per cent to the gross domestic product (GDP) and employing over 80 per cent of the workforce, the chamber emphasised their vulnerability.

It pointed out that as of March 31 this year, only 20 per cent of businesses had registered on eTiMS, despite the Kenya Revenue Authority's (KRA) deadline for adoption. This low compliance rate underscores the challenges businesses face in adopting the system.

The chamber's Q2/2024 Quarterly Business Barometer Survey indicated many businesses have annual revenues below Sh1 million, illustrating the severe economic impact on entrepreneurs.

"The majority of these enterprises operate informally and have struggled to understand or adopt eTiMS," KNCCI noted. The chamber advocated for a more supportive approach, recommending comprehensive capacity-building programmes and accessible information to aid MSMEs in eTiMS compliance.

The KNCCI proposed a phased eTiMS implementation with a grace period for adaptation and suggested a tiered penalty system to ease the burden on smaller enterprises.

"We urge the government to reconsider the penalty and prioritise capacity-building initiatives," KNCCI stated. "Together, we can create an environment where businesses thrive and contribute to Kenya's prosperity."