Kenya: KRA new tax invoice management software is being rolled out – Guidelines for the application of VAT (Electronic Tax Invoice) Regulations 2020
The Kenya Revenue Authority (KRA) has implemented the Electronic Tax Invoice requirements. All VAT-registered individuals were required to comply with the Value Added Tax (Electronic Tax Invoice) Regulations 2020 on the integration of the electronic tax invoice within a 12-month period beginning 1 August 2021.
Each VAT registered company must update their Electronic Tax Register(s) in accordance with the standards specified in the Regulations within the timeframe specified.
The user’s obligations include ensuring the register is
1.available at the point at the time of sale,
2.enabling inspection of the register by an authorized official, and
3.ensuring the register is maintained on a regular basis to ensure proper operation.
A tax invoice created from a register must have the following information:
- the buyer’s PIN and the registered user’s PIN
- the invoice’s issue date and serial number
- total gross amount, tax rate applied, and total tax
- supply item codes (exempt, zero-rated, and other rate supplies)
- a concise description of products and services, their amount, and measurement
- the unique identification for the register and the invoice
- a QR (quick response) code; and
- any additional requirements imposed by the Commissioner
When the current Electronic Tax Registers are upgraded, taxpayers are advised to maintain and safeguard the data in the previously utilized ETR in accordance with the need to keep records for five (5) years as specified in Section 23 of the Tax Procedures Act 2015.
If a person is unable to comply within the deadlines, they must request to the Commissioner for a six-month extension of time to comply, as provided in the Regulations. The application for extension must be submitted on or before July 1, 2022.
A merchant must notify a malfunctioning register to a service person (authorized Tax Register providers and their makers) and to the Commissioner in writing within 24 hours. During the time when the ETR is not operational, the trader will record sales using any other method prescribed by the Commissioner.
Penalties
Failure to comply with the Regulations is an infraction punishable by a fine not exceeding KSh 1 million or imprisonment for a period not exceeding three years, or both, as stipulated in Section 63 of the VAT Act 2013.
Users of a register who can’t use the register for any reason, they must:
1.inform the Commissioner in writing of the user’s inability to access the register within twenty-four hours
2.record sales using methods that the Commissioner may specify; and
3.enter sales recorded via other ways into the system as soon as they become available.
The deployment of an electronic invoicing system provides an excellent opportunity for the KRA to resolve VAT collection gaps. If properly implemented, it will reduce the existing reconciliation issues that taxpayers face, aid in the elimination of input VAT fraud, and enable the KRA to process VAT refund claims more quickly.
Source: kra.go.ke
