The Kenya Revenue Authority (KRA) is banking on its new Tax Invoice Management System (TIMS) to increase VAT collections to 35 per cent of total tax revenue, even as the system seeks to boost tax compliance in small businesses.
All businesses are expected to have migrated to the new electronic register that captures and sends to the taxman all transactions, in real-time by August 1, 2022.
TIMS, an upgrade of the Electronic Tax Register(ETR), is a system that will allow real-time transmission of data directly to KRA’s digital system, iTax, at the touch of a button.
In the system, taxpayers are required to keep and safeguard the data in the previously used ETRs as the law requires them to keep the record for five years.
Speaking during a media sensitization on the new system on Monday, Chief Manager Domestic Taxes KRA, Hakama Wangwe called on businesses to migrate their systems to TIMS to ease how they access their tax records.
“TIMS will not only enhance compliance and increase VAT collections but also give good visibility of vatable transactions hence even make record keeping easier,” Hakama Wangwe.
With TIMS, if you invoice someone, the information of your sale will go to iTax directly and the purchase of expense will go to the other party directly on their iTax account.
Those who do not comply with the regulations will be liable to a fine not exceeding Sh1 million, imprisonment for a term not exceeding three years, or both. The legal basis of TIMS is the VAT Act of 2013 and the VAT (Electronic Tax Invoice) Regulations, 2020.
In 2021, Value Added Tax (VAT) collections amounted to Sh121.044billion against a target of Sh119.543billion.
Read also; KRA to Rebrand As it Pursues Tax Evaders.
