Traders will be required to show proof of order and payment for the new Internet-enabled electronic tax registers (ETRs) ahead of the Sunday deadline, as the taxman seeks a way around the supply hitches.
The Kenya Revenue Authority (KRA) reportedly arrived at the decision after the licensed dealers of the new tax registers ran out of the machines. The KRA held a virtual crisis meeting with all the 16 approved suppliers on Wednesday morning where the deal was discussed.
The Business Daily reported on Tuesday that more than half of the licensed dealers of the new tax registers had run out of the machines and are awaiting new shipments ahead of the July 31 deadline.
“We had a crisis meeting with KRA this morning (Wednesday) to address the lack of stocks amongst suppliers,” said a source who sought anonymity.
“We agreed that taxpayers will be on-boarded once they issue LPO/payment. Once on board, the penalty will be waived,” they added.
The KRA, however, insisted that the commitment must be done by July 31.
“The taxpayers' details will be forwarded to KRA for their records and action. The deadline still stands at July 31, 2022,” said the source.
The KRA did not respond to Business Daily queries on how it plans to deal with the shortage.
The ETRs are expected to relay real-time data on daily sales to the taxman, and the shortage threatens to ground operations of some traders from Monday.
Manufacturers and traders who fail to upgrade ETRs at their premises ahead of the deadline risk a Sh1 million fine or a jail term of three years.
The taxman had assured traders that the gadgets were in plenty and would not run out ahead of the implementation deadline.
Sixteen suppliers are mandated by the KRA to supply the gadgets.
The law requires all businesses with an annual turnover of at least Sh5 million to have ETRs.
Under the new system, the KRA will receive sales and invoice data from all registered firms and traders daily in a fresh push to boost revenue collections and curb tax evasion.
The new technology will deepen the scrutiny of traders’ transactions.
The move comes as the taxman moves to seal revenue leaks and boost State coffers in the race to reduce reliance on public debt.
Traders will also be required to seek the taxman’s permission to perform any other business the next day under the system, meaning incorrect or incomplete data logged the previous day could lock them out.
“If a VAT-registered taxpayer does not comply within the specified period then we invoke section 53 of the VAT Act which says that you will either be fined Sh1 million or three years imprisonment or both if you don’t comply within the specified timeline,” Hakamba Wangwe, the chief manager in charge of Tax Invoice Management System operations, said earlier.
The new ETR will upgrade the current manual tax registers that store sales data for scrutiny by the KRA after 30 days.
“The system seeks to enhance compliance. With the current situation where we have most of the processes being manual, we don’t have visibility of Vatable transactions,” said Ms Wangwe.
Besides the upgraded ETR software, traders are supposed to procure software for the devices.
Suppliers have been recording booming business amid the scramble to comply by Kenyan firms. The ETR are retailing at between Sh45,000 to Sh120,000 while the billing software is about Sh80,000.
The new ETR will be connected through the internet to the KRA’s systems, allowing it to monitor all transactions in the traders’ point of sale and invoicing systems.
“The idea for KRA is to use technology to track sales on a real-time basis. So when someone makes a sale they will know and the buyers’ iTax page will also be updated,” said Nikhil Hira, a tax expert and business partner at Kody Africa LLP.
As part of the shift to tech, the KRA said recently its workers would start wearing body cameras in the latest bid to curb tax cheating and staff bribery.
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