In recent years, the Kenya Revenue Authority (KRA) has been at the forefront of modernizing tax administration to enhance compliance and boost revenue collection. A significant milestone in this journey is the automation of the electronic Tax Invoice Management System (eTIMS) registration process. This development marks a pivotal shift towards simplifying tax compliance for businesses across Kenya.
Understanding eTIMS:
The electronic Tax Invoice Management System (eTIMS) is a software solution introduced by KRA to provide taxpayers with a simple, convenient, and flexible approach to electronic invoicing. Accessible on various devices—including computers, laptops, tablets, smartphones, and Personal Digital Assistants (PDAs)—eTIMS enables businesses to issue electronic tax invoices and transmit them directly to KRA. This system not only streamlines the invoicing process but also enhances transparency and accuracy in tax reporting.
The Shift to Automated Registration:
Traditionally, businesses seeking to onboard eTIMS were required to undergo a manual approval process by KRA. This often led to delays and added complexities, particularly for small and medium-sized enterprises (SMEs) lacking robust technical infrastructure. Recognizing these challenges, KRA has upgraded the system to allow for self-onboarding, eliminating the need for manual intervention. Now, taxpayers can apply for any of the available eTIMS solutions and receive immediate confirmation via text message upon successful application.
Benefits of Automated eTIMS Registration:
- Instant Onboarding: Businesses can now register for eTIMS without waiting for manual approval, facilitating immediate compliance and operational efficiency.
- Flexibility in Invoicing: The upgraded system allows taxpayers to use different eTIMS solutions simultaneously, enabling them to generate invoices at their convenience.
- Cost Reduction: By providing free eTIMS solutions, KRA aids in reducing compliance costs, especially benefiting smaller businesses that may have previously struggled with the financial burden of integrating complex invoicing systems.
- Enhanced Compliance: Automated registration simplifies the process, encouraging more businesses to comply with tax regulations, thereby broadening the tax base and increasing revenue collection.
Challenges and Responses:
Despite the advantages, the adoption rate of eTIMS has been slower than anticipated. As of June 2024, only 18.1% of registered taxpayers with business income had signed up for eTIMS, representing a significant gap in compliance. This low uptake has been attributed to factors such as lack of awareness, technical difficulties, and resistance due to perceived complexity.
To address these challenges, KRA has implemented several strategies:
- Stakeholder Engagement: Conducting targeted campaigns and providing training to educate businesses about the benefits and functionalities of eTIMS.
- Technical Support: Offering assistance through user guides, how-to videos, and support centers to help businesses navigate the onboarding and invoicing processes.
- Policy Adjustments: Exempting businesses with annual sales below Sh5 million from mandatory eTIMS registration, thereby reducing the compliance burden on smaller enterprises.
How to Register on eTIMS
The onboarding process for eTIMS has been streamlined to ensure ease of use:
- Sign Up: Visit the eTIMS Taxpayer Portal via etims.kra.go.ke and click on the Sign-Up button. Input your KRA PIN.
- OTP Verification: A One-Time Password (OTP) will be sent to your iTax registered mobile number. Input the OTP on the sign-up page and create a password to complete the sign-up process.
- Log In: Use your User ID (KRA PIN) and the password created during sign-up to log in to the eTIMS taxpayer portal.
- Service Request: Click on the Service Request button and select your preferred eTIMS software solution listed under the “eTIMS Type” menu.
- Document Upload: Upload the necessary documents, including a copy of the National ID of at least one of the directors for companies, partners for partnerships, or the business owner for sole proprietorships, and a duly
Impact on Revenue Collection
The implementation of eTIMS has already shown positive outcomes in tax revenue collection. During the 2023/2024 financial year, VAT collection registered a growth of 15.3%, surpassing the previous year’s growth of 13.4%. This performance is largely attributed to the enhanced visibility and accuracy in taxpayer transactions facilitated by eTIMS.
Read: Banks Resist KRA’s Data Integration Amid Customer Privacy Concerns
Future Outlook:
KRA aims to increase eTIMS adoption to 51% of businesses in its register by June 2025. Achieving this target will require sustained efforts in stakeholder engagement, technical support, and policy refinements to address the concerns and challenges faced by businesses. The automation of the eTIMS registration process is a significant step in this direction, simplifying compliance and encouraging more businesses to integrate into the formal tax system.
Additionally, KRA’s move to automate eTIMS registration underscores its commitment to leveraging technology to enhance tax compliance and revenue collection. By simplifying the onboarding process and providing flexible invoicing solutions, KRA is making it easier for businesses to fulfill their tax obligations. As more businesses adopt eTIMS, Kenya can look forward to a more transparent, efficient, and robust tax administration system that supports economic growth and development.
FAQs
What is eTIMS?
eTIMS (electronic Tax Invoice Management System) is a digital invoicing system introduced by KRA to streamline tax compliance. It enables businesses to issue, store, and transmit electronic tax invoices to KRA in real time.
What has changed with the automation of eTIMS registration?
Previously, businesses had to undergo a manual approval process to access eTIMS. With automation, businesses can now register and start using eTIMS instantly without waiting for manual verification by KRA.
Who is required to register for eTIMS?
All VAT-registered businesses are required to register for eTIMS. However, businesses with annual sales below Ksh 5 million have been exempted from mandatory registration.
How do I register for eTIMS?
You can register via the KRA iTax portal or visit KRA’s official eTIMS page. Once registered, you will receive a confirmation message via SMS.
Is there a cost for registering for eTIMS?
No. KRA provides free eTIMS solutions to businesses, helping reduce compliance costs. However, businesses that opt for third-party invoicing solutions may incur integration costs.
What devices can I use to access eTIMS?
eTIMS is accessible on multiple devices, including computers, tablets, smartphones, and PDAs, making it convenient for businesses of all sizes.
What happens if I don’t comply with eTIMS requirements?
Failure to comply with eTIMS requirements may result in penalties, including fines and restrictions on VAT deductions. KRA is actively monitoring compliance and encouraging businesses to onboard before enforcement begins.
How does eTIMS improve tax compliance?
By automating invoice generation and submission, eTIMS enhances accuracy, reduces tax evasion, and ensures businesses comply with VAT regulations.
Can I use multiple eTIMS solutions at the same time?
Yes. KRA allows businesses to use different eTIMS solutions simultaneously, offering flexibility in tax invoicing.
Where can I get support if I experience issues with eTIMS?
KRA provides support through its official website, service centers, and the customer support helpline. Additionally, detailed guides and how-to videos are available to assist businesses with onboarding and usage.
