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Businesses Shun KRA’s eTIMS System

Initially, KRA had envisaged registering a total of over 900, 000 recognised businesses, a figure they had derived from their own records.

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The Kenya Revenue Authority (KRA) gave March 31, 2024 for all businesses to on-board the eTIMS system for easy verification of transaction records and specifically proof of client invoicing.

Initially, KRA had envisaged registering a total of over 900, 000 recognised businesses, a figure they had derived from their own records.

However, when the deadline hit, to the surprise of KRA only 49% of the registered 236,000 businesses oN the eTIMS system were actively using it. The Kenya National Bureau of Statistics (KNBS) however states in its records that over 7 million businesses existed within the country within the past year.

KRA, through its electronic tax invoice management chief manager, Hakamba Wangwe, now says that among its options, penalties would be meted out to ensure compliance. What is baffling, however, is that Wangwe also claims that many businesses are still onboarding eTIMS by using the USSD code, the Web application on eCitizen and a newly introduced mobile app on playstore as the big VAT registered businesses remain domiciled on the eTIMS platform, even though they fail to activate usage if the system.

In 2023, KRA had stated that every business in the country was expected to invoice at all transactions through the eTIMS from 1st April 2024 after having postponed the same from 1st January 2024. The tax authority now says it is keen to monitor all these recorded transactions for a better visibility of VAT claims by the concerned businesses.

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The tax authority, in a bid to widen the tax net, has also tried roping-in farmers, so far unsuccessfully, as political heat spilled out of control since KRA officials’ visit to avocado farmers earlier this year.

The Tax authority says they are still in talks with all cadres within the farming fraternity and beyond to get all Kenyans to pay taxes.

Why businesses are not boarding

However, most businesses are yet to on-board. There are a number of reasons that they say are beyond their control.

Virginia, who sells locally manufactured hardware goods says she trades with a majority of other businesses who are not on-boarded as yet. There are other traders who complain on the number of things required to register one-self on the eTIMS platform.

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Recently, when making a purchase from a second hand car dealer from a very tiny shop, situated within a corridor, at the back of Kirinyaga street, I heard the shopkeeper turn down a generous order from a fellow trader because he insisted he could not generate an eTIM invoice. He had not on-boarded because they were asking for so many things and his level of knowledge was not much help.

Julius, a small trader who runs an eatery attached to a green grocery kiosk known locally as “kibandasky.” His joint is frequented by informal sector workers deep in Kangemi area. At a recent meeting, he was at pains describing how the eTIMS system is a micromanagement of their businesses and he does not see in it any particular benefit for his small business, so he has not on-boarded.

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If anything he says he would have to employ someone extra to ensure he generates invoices whenever he makes a sale to other traders selling further afield so it adds a cost to his small business which he cannot absorb.

I spoke to a doctor who said he simply cannot onboard the system. He says the eTIMS system expects that every consultation registered at his clinic equals money having been paid yet that is not always the case as not all clients pay promptly and others end up not paying at all! They have raised the issue through their medical professional organization and hope an amicable solution will soon be reached.

Elephant in KRA’s room

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The real work still remains with KRA, to not only carry out more advocacy on the role of every citizen in supporting the state in delivering important common services but also in ensuring that the large population yet to get into the tax bracket are given a reason to be proud of paying their taxes.

The urban Kenyans are ever suspicious that their hard earned money is what they see every other day embezzled by well-placed government officials while those on far flung places in the corners of the country still feel they are marginalized and neglected, so why support negligence, despite the advent of devolution.

Many people in the country are still unaware of the concept of paying tax beyond what they pay the county government at the local livestock market when they sell their cattle to take their children to school. The KRA needs to connect more with the citizenry from the highest to the lowest in society in its collection of taxes, and it should avoid coercing them in a bid to making them comply.

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Many Kenyans still need more tax education, better tax facilitation and above all a tax system that is averse to punishment when seeking tax compliance but look for innovative ways to nudge Kenyans to pay tax for realistic and better services and enrich their lives.

There are those sophisticated tax cheats who owe millions of billions in taxes, fines and prosecution should be directed towards them even as first time small tax payers are facilitated and celebrated for their baby steps.

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