Kenyan traders without electronic tax registers (ETRs) could face prosecution from July 31, 2022


The Kenya Revenue Authority no longer has access to real-time data on daily sales since the country has run out of electronic tax registers (ETRs) that are connected to the internet ( KRA).

Because of this issue, the actions of some traders may be rendered impossible after the implementation date of July 31, 2022. In addition, a fine of KSh 1 million ($21,511) or a prison sentence of three years could be imposed for this offense.

Business Daily reports that more than half of the licensed sellers of the new tax registers have sold out and are currently awaiting new shipments in order to meet the deadline of July 31.

The ETR is a cash register that has fiscal memory and maintains a record of all transactions. This record is kept for the purpose of the trader accounting for Value Added Tax (VAT), which is assessed when a sale is made.

In essence, it establishes a connection between your company and the tax collector, which helps to reduce instances of fraud and boosts cash flow.

Advertisement

If the devices weren't available, business owners would have little choice except to stop what they're doing or ask the Commissioner of Domestic Taxes for an additional six months to comply with the law.

The Electronic Tax Return (ETR) can be obtained after first registering for it online through iTax. Once it has been registered, the company will submit monthly online returns to account for the VAT that was charged on taxable supplies and will pay any outstanding VAT.

These machines are available for purchase from a merchant who is recognized by the KRA.

The Electronic Transaction Register (ETR) was first introduced in Kenya in 2005 with the purpose of automating the VAT collecting process and reducing the number of instances of tax evasion.

As a direct result of this, the Cabinet Secretary of the Treasury officially designated The VAT (Electronic Tax Invoice Regulations) 2020 in September of 2020, so initiating the implementation of the Electronic Tax Invoice.

In addition, taxpayers have had a transition period of one year since the new system went into effect on August 1, 2021, during which time any new problems have been addressed. In essence, all taxpayers who are registered for VAT are required to conform by the 31st of July in 2022.

To comply, business owners must upgrade their ETRs, as upgraded ETRs can validate invoice data generated during a sale to ensure its accuracy.

The Tax Invoice Management System is used to handle the management of these upgraded ETRs ( TIMS).

ETRs are required by law for all businesses with a minimum annual turnover of Sh5 million ($42,126).

It helps the taxman close revenue leakage and strengthens State coffers to reduce dependency on public debt.

The taxman had earlier attempted to convince dealers that the devices were nationwide available and would not run out before the implementation deadline.

According to Business Daily, the stock-out is making it tough for them because several dealers have already stated that they will sue to force the taxman to extend the deadline.