The Kenya Revenue Authority (KRA) has announced the upgrading of the Tax Invoice Management System (TIMS) to e-TIMS with the aim to reduce the Value Added Tax (VAT) and start off the journey towards pre-filled returns.
The e-TIMS is set for groundwork to expand the reach to taxpayers in other tax heads, minimize the cost of compliance, increase tax compliance and accountability, to provide additional options to taxpayers and address the ‘missing trader’ phenomena.
KRA Deputy Commissioner in charge of the Medium Taxpayers Office, George Obell observed that to date, taxpayers on TIMS number 67,954 against 113,239 active taxpayers which leaves 45,285 taxpayers to be brought on board.
“Kenya’s tax to Gross Domestic Product (GDP) ratio is currently at 15.3 percent with VAT accounting for 4 percent while Rwanda’s tax to GDP ratio is 16.9 per cent with VAT accounting for 7 per cent,” revealed Obell.
He further stated that due to the progressive implementation of the Evidence Based Management (EBM) in Rwanda, there has been a significant growth in VAT collection which currently represents the largest share of revenue.
He however disclosed that there is a 32 percent of the total tax collected that is not accounted for.
The Deputy Commissioner cited an increase in VAT collection with the implementation of TIMS whereas e-TIMS is expected to close the gap by bringing all VAT registered taxpayers on board and enhancing compliance.
Obell highlighted some of the expectations from the new system to include; transaction to full roll out of e-TIMS, all VAT registered taxpayers to issue only invoices transmitted to KRA for purposes of claiming input tax and capacity building for KRA staff on data analytics and enforcement to fully exploit the value addition.
According to Obell, the key considerations in determining the taxpayers to be on-board on e-TIMS include taxpayers dealing in bulk invoicing and facing performance issues with invoice transmission, taxpayers who have not on-boarded on TIMS by upgrading their ETR and taxpayers who have businesses but are technologically challenged.
“Our invoicing statistics indicates that data collected as at March 2, 2023 shows total receipt data summed up to 908, sales data totaled to 178,245,995.61, VAT data amounted to 17,505,996.15 and device statistics was at 298,” he reported.
Obell pointed out the benefits of e-TIMS to VAT taxpayers including; simplified VAT return filing, faster processing of VAT refunds, on-intrusive verification of tax processes and fostering a fair business environment while the public will have a chance to participate in enhancing tax compliance.
He further reiterated that through this system the Government will improve ability to forecast revenue collection, economic analysis and prediction based on accurate data and enhance good governance in the field of taxation.
Obell added that the new technology will be more valuable if all taxpayers are registered in the system.
By Sylvia Kavisi and Garvin Patrick
