The Kenya Revenue Authority has rescinded its decision to exempt farmers and small businesses with an annual turnover of less than Sh5 million from producing invoices through the electronic tax invoice management (eTims) system.
While unveiling a new eTims solution dubbed ‘eTims Lite’ tailored for non-VAT registered taxpayers on Monday, the taxman said all persons carrying out business in Kenya will be required to electronically generate and transmit invoices.
“KRA would like to remind the public that all persons carrying on business including those in the informal sector and small businesses are required to electronically generate and transmit their invoices to KRA via the eTims system,” said the Authority in a public notice.
The new solution, which KRA said is part of the efforts aimed at supporting and facilitating taxpayers to comply with the law, will be accessible both via the eCitizen platform and USSD code *222#.
“KRA remains committed to continue supporting and facilitating all taxpayers to comply with the requirements of the law by adopting a facilitative and collaborative approach to tax compliance,” the notice read.
“To this end, we have availed [sic] eTims simplified solutions dubbed eTims Lite for non-VAT registered taxpayers.”
With the deadline for mandatory eTims onboarding set for March 31, the latest development signals a below-target uptake, especially by players in the informal business sector who were ideally the key target in the directive.
In the Tax Procedures (Electronic Tax Invoice) Regulations, 2023, the KRA had listed supplies by businesses with an annual turnover of less than Sh5 million among nine transactions that would be exempted from the electronic tax invoice in a move that spelled a relief for farmers and small businesses.
“The following transactions shall be excluded from the requirement of an electronic tax invoice…supplies by a resident person whose annual turnover is less than five million shillings,” the Authority wrote in the regulations.
Other transactions included emoluments, imports, interest, airline passenger ticketing, accounting adjustments, fees charged by financial institutions, and services provided by a foreigner without a permanent establishment in Kenya.
The rules, which came into effect at the beginning of the year, require businesses to produce an electronic tax invoice for all transactions or fail to claim the expense when filing for income tax.
Last December, the KRA indicated that small enterprises would only be required to show a record of transactions rather than generate electronic invoices.
