Businesses to onboard eTIMs instantly as KRA scraps manual approval
The taxman has automated the registration process, streamlining compliance and making it easier for businesses to adopt the system.
Businesses and taxpayers will now onboard on the electronic tax invoice management system (eTIMs) without requiring manual approval from the Kenya Revenue Authority (KRA). The taxman has automated the registration process, streamlining compliance and making it easier for businesses to adopt the system.
KRA introduced eTIMs in 2023 as part of efforts to seal revenue leakages by ensuring that all business expense claims are backed by actual receipts. With the latest system upgrade, businesses applying for eTIMs services will receive instant confirmation, streamlining the onboarding process.
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"The system upgrade allows for self-onboarding by eliminating the requirement for eTIMs approval of taxpayer applications by KRA," KRA Commissioner for Domestic Taxes Risper Simiyu said.
"This means that taxpayers can now apply for any of the available eTIMs solutions without requiring intervention from KRA. The taxpayer will receive a text message confirming the application as being successful."
The improved system also allows businesses to use multiple eTIMs solutions simultaneously, giving them greater flexibility in generating invoices. All companies, partnerships, sole proprietorships, associations, trusts, and landlords are required to integrate eTIMs for issuing electronic tax invoices and transmitting them to KRA.
eTIMs is accessible through various platforms, including a web-based portal, downloadable software, and the Virtual Sales Control Unit (VSCU) and Online Sales Control Unit, which integrate with taxpayers' invoicing or Enterprise Resource Planning (ERP) systems.
Boost eTIMs adoption
The automation of the onboarding process is expected to be instrumental in boosting the adoption of eTIMs. Currently, compliance remains low, with more than three-quarters of registered businesses yet to embrace the system. KRA previously reported that only 120,000 taxpayers with business income had signed up for eTIMs by June last year, representing just 18.1 per cent of the 663,000 firms in the tax agency’s records.
eTIMs requires businesses to submit receipts or invoices as proof of expenses, enabling KRA to monitor transactions in near real-time and flag discrepancies. However, tax consultants have pointed out that the slow uptake is largely due to smaller businesses lacking the technical capacity and knowledge to integrate with the system.
To ease this burden, Parliament in December approved an exemption for businesses with annual sales below Sh5 million from mandatory registration on eTIMs. The change also allowed larger firms purchasing goods and services from smaller businesses to generate electronic invoices on their behalf, a move expected to prevent large firms from inflating sales figures while underreporting profits to evade taxes.
KRA said it hopes that automating eTIMs registration will encourage more businesses to comply, improving tax transparency and revenue collection in the long run.
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