The Kenya Revenue Authority (KRA) has launched an upgraded version of its Tax Invoice Management System, called the electronic Tax Invoice Management System (eTIMs), which enables organizations to transmit tax invoices in real-time using various digital devices such as computers and mobile phone apps. The system targets small, medium, and large-scale taxpayers and is expected to increase VAT collection by 35% and boost tax compliance among small businesses.
To facilitate compliance, KRA is providing the software at no cost to business owners. The objective of eTIMS is to reduce the cost of compliance for VAT-registered businesses and provide accuracy in tax invoice declarations and reconciliation between filed returns and payments. This will also eliminate the need for multiple hardware purchases, making it simple, convenient, and flexible to use.
Rollout of the upgraded system has entered the second phase and will be done gradually, targeting traders who were unable to purchase the upgraded Electronic Tax Registers. The system’s software version aims to provide additional ways of transmitting invoices to KRA. The mobile app version is geared towards small traders, while other options such as the eTIMS Client (desktop/laptop version) and the Virtual Sales Control Unit (VSCU), designed for taxpayers with invoicing systems that can integrate into the VSCU via API or third-party integrators.
The eTIMs solution was successfully implemented in Rwanda, leading to an increase in Value Added Tax (VAT) revenue. Currently, Kenya’s tax to Gross Domestic Product (GDP) ratio is at 15.3%, with VAT accounting for 4%, while Rwanda’s tax to GDP ratio is 16.9%, with VAT accounting for 7%. KRA hopes to reduce the VAT gap and start on the journey towards the pre-filled return through the adoption of this solution.