The Kenya Revenue Authority (KRA) is planning on coming up with an electronic tax register, Tax Invoice Management System (TIMS), to help with tracking tax defaulters.
The authority proposes that all traders, manufacturers, and suppliers have Internet-enabled electronic tax registers (ETRs), that will also be connected to KRA systems so that KRA is able to monitor all transactions and conduct the invoicing at every transaction.
According to KRA, conducting an invoice at every business transaction will help them be timely in terms of assessing tax dues.
“TIMS is an information technology integration system that will integrate traders’ systems (Electronic Tax Registers, Point of Sale and ERP-Billing/Invoicing system) with iTax to help monitor the generation of electronic tax invoices and their transmission through the internet,” read a notice provided by KRA.
With TIMS, the Kenya Revenue Authority will be able to monitor all registered businesses’ sales data on a daily basis.
If a trader fails to log in correct data during the invoicing, the business risks being locked out by KRA as all traders and businesses under the system will be required to be cleared by the authority every day before they proceed with the business for the day.
According to tax experts, scrutiny and controlling of transactions will reinforce tax payment adherence which is a good step.
“TIMS system will give KRA visibility of the invoicing process by suppliers at an earlier stage and in some way to link purchases to sales to ensure full disclosure of income by taxpayers,” explained tax expert Nikhil Hira.
Once the proposal is made reality and KRA is ready with the electronic registers, manufacturers and traders will be required to bear the purchasing costs.
Tax expert Mr. Hira, however, thinks that the manufacturers will pass the costs to the consumers, adding tax costs to them.
“I assume that when the machines are finally sourced, taxpayers will be told to buy and start using them. Of course, this means additional costs for taxpayers,” he explained.
TIMS is one among several other strategies KRA has proposed and implemented in the past year in an effort to get everyone to pay their taxes.