Traders face Sh1 million fine over electronic tax invoices
Thursday May 04 2023
Traders who fail to issue electronic tax invoices to customers face a fine of Sh1 million or 10 times the tax due in proposed changes to the law meant to boost compliance with the mandatory invoice.
The fines that are contained in the Finance Bill will also apply to traders who fail to submit a tax return electronically as the State moves to weed out tax cheats and boost revenue.
Read: How Kenya is juggling with digital tax rules
The Kenya Revenue Authority (KRA) rolled out the electronic tax invoice management system (e-TIMS), an Internet-enabled tax register that relays real-time sales data for firms registered to collect value-added tax (VAT).
The KRA reckons that the electronic registry offers the highest potential to grow revenues to Sh3.8 trillion in the next four years.
“Where the reasons given under subsection (1) do not satisfy the Commissioner, the taxpayer shall be liable to a penalty of one million shillings or an amount equal to ten times the amount of the tax due, whichever is the higher,” the Bill reads.
The Bill was tabled in Parliament on Wednesday and marks the latest efforts by the KRA to enlist all suppliers into e-TIMS.
The e-TIMS platform is key to efforts to stem the challenge of fictitious claims besides helping to push the number of its VAT-registered agents to more than 300,000 from the current 113,239.
Read: KRA nets Sh174m in digital service taxes in six months
The revenue authority adds that there are many businesses with a turnover of more than Sh5 million a year, the threshold for collecting VAT on behalf of the KRA, but which have not been registered because their transactions have not been visible to the taxman.