Why Over Half Of Kenyan Businesses Are Yet To Onboard ETIMS

• The Kenya Revenue Authority (KRA) planned to register over 900,000 businesses on the electronic tax invoice management system
• To the taxman's amazement, only 49% of registered firms on the eTIMS system were actively using it when the deadline arrived
• Financial expert Walter Tarus opined that businesses could be snubbing the service because the margin of their profits could be small

TUKO.co.ke journalist Japhet Ruto brings over eight years of experience in financial, business, and technology reporting, offering deep insights into Kenyan and global economic trends.

According to the Kenya Revenue Authority (KRA), all businesses were required to onboard the electronic tax invoice management system (eTIMS) by March 31, 2024, to facilitate the easy verification of transaction records, particularly customer invoicing confirmation.

How many businesses have registered on eTIMS?

KRA had planned to register over 900,000 recognised businesses, a number they had calculated based on their records.

However, to the taxman's amazement, Business Daily reported that only 49% of registered firms on the eTIMS system were actively using it when the deadline arrived.

According to the Kenya National Bureau of Statistics (KNBS) data, more than 7 million enterprises operated in the country last year.

Why businesses could be penalised

According to Hakamba Wangwe, the chief manager of KRA's electronic tax invoice management system, the authority could impose penalties to enforce compliance.

Wangwe, nevertheless, asserted that a large number of businesses were still onboarding eTIMS through the USSD code, the eCitizen Web application, and a recently released mobile app on the Play Store because large VAT-registered businesses continue to be based on the eTIMS platform despite neglecting to activate system usage.

According to a 2023 KRA statement, starting on April 1, 2024, every business was supposed to invoice for all transactions through the eTIMS.

Before it was extended, the deadline had been set for January 1, 2024.

KRA to monitor transactions

The government's principal revenue collector was eager to monitor all documented transactions to improve the visibility of the VAT claims made by the relevant businesses.

Aiming to widen the tax net, the tax authority has been engaging farmers countrywide.

KRA noted negotiations were ongoing to ensure that all Kenyans pay taxes.

Why businesses are not onboarding eTIMS

Most companies were yet to embrace eTIMS, citing several factors beyond their control.

Financial expert Walter Tarus opined that businesses could be snubbing the service because the margin of their profits could be small.

"There's the recent agricultural tax. Onboarding on eTIMs means small businesses may not make profits. The margin that the owners benefit from is small," he told TUKO.co.ke.

Stanley Korir, a 46-year-old sugarcane farmer in Nandi, said he did not know how to register on eTIMS and was unaware of its workings.

"What is eTIMS? I don't understand how it works. However, I recently heard from other farmers that they must generate invoices electronically before supplying millers in Western Kenya. It seems it will be a tall order to sell cane," Korir told TUKO.co.ke.

George Rotich, a graphic designer in Nairobi, decried the high taxation by President William Ruto's government.

"The most major challenge is the punitive taxes that make running a business difficult," he disclosed.

Why KRA launched eTIMS

• KRA upgraded the tax invoice management system to help businesses transmit invoices electronically in real-time.
• Without eTIMS, businesses will also be unable to get the tax compliance certificates necessary to get tax refunds from KRA.
• Businesses were asked to ensure their suppliers were also integrated on eTIMS so that their expenses could be exempt from taxes.
• eTIMs Lite is meant for non-Valued Added Tax (VAT) registered taxpayers and can be accessed by dialling the short code *222#.

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Revenue service assistants at work.

Why Over Half of Kenyan Businesses Are Yet to Onboard eTIMS - Tuko.co.ke

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