The unavailability of the new upgraded internet-enabled electronic tax registers (ETRs), the high cost of acquiring them and tight economic conditions for traders have forced the taxman to delay the rollout.
The Business Daily learnt on Tuesday that a crisis meeting between suppliers and the agency led by Commissioner General Githii Mburu resolved to postpone the deadline by 30 days following a shortage of the devices.
The Business Daily reported a week ago that more than half of the licensed dealers of the new tax registers had run out of the machines and were awaiting new shipments ahead of the July 31 deadline fomenting a crisis.
Following the move by the Kenya Revenue Authority (KRA) to delay the mandatory rollout, traders yesterday heaved a sigh of collective relief.
“The KRA has extended the deadline for the requirement by taxpayers to comply with regulations of Tax Invoice Management System (TIMS) to September 30, 2022,” said the KRA on Monday in a notice to traders.
“The extension of the deadline is an administrative decision necessitated by taxpayers’ request for more time to acquire and activate their TIMS devices in compliance with Electronic Tax Invoice (ETI) Regulations that were gazetted on September 25, 2020, Legal Notice 189.”
Suppliers have been recording booming business amid the scramble to comply by Kenyan firms. The ETR is retailing at between Sh45,000 and Sh120,000 while the billing software is about Sh80,000.
Manufacturers and traders who would have failed to upgrade ETRs at their premises ahead of the deadline risked a Sh1 million fine or a jail term of three years.
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.
Traders will also be required to seek 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.
The extension decision yesterday by the taxman marked a U-turn from an earlier hardline position that despite the shortages, traders would be required to show proof of order and payment for the new ETRs ahead of the Sunday deadline.
KRA had earlier said on Friday for traders who are in the process of acquiring upgraded ETRs, the proof of compliance shall include evidence that they have placed an order and made payment to the approved ETR Supplier.
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.