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Kenya Revenue Authority
Unpacking KRA's eTIMS: A New Era for Tax Compliance in Kenya for Businesses & Individuals.
What is eTIMS?
The eTIMS system is KRA's innovative response to the challenges of tax compliance, designed to facilitate a seamless, efficient, and transparent process. By automating tax invoicing, eTIMS significantly reduces the administrative burden on businesses and individuals, ensures accuracy in tax reporting, and combats tax evasion. This system is not just a step forward in digitalization; it's a major transition towards enhancing the ease of doing business in Kenya.
The Significance of eTIMS.
With a deadline for sign-ups looming on the 31st of March 2024, the urgency to understand and adopt eTIMS has never been more critical. The platform's development was driven by a need to align tax processes with the dynamic nature of modern business and individual operations, offering a solution that is both accessible and comprehensive.
In this episode, we unpack the Tax Amnesty Programme, which allows taxpayers to rectify their tax affairs while avoiding severe penalties and interest.
The primary goal of the Tax Amnesty Programme is to encourage taxpayers to come forward and disclose any undisclosed income, settle their outstanding tax liabilities and enjoy 100% amnesty on penalties and interest
The Tax Amnesty Programme typically covers various types of taxes, including income tax, value-added tax (VAT), corporate tax, and other taxes under domestic taxes. It applies to both individual taxpayers and businesses.
Where a person has paid all the principal taxes that were due by December 31, 2022, they will be entitled to an automatic waiver of the penalties and interest related to that period and will not be required to make an amnesty application.
Where a person has not paid all the principal taxes accrued up to December 31, 2022, they will be required to apply to the Commissioner for amnesty on interest and penalties and propose a payment plan for any outstanding principal taxes, which should be paid no later than June 30, 2024.
The main objective of Ushuru Mashinani is to create awareness and help customers understand their tax obligations by providing tax education and services to the citizens to enhance revenue collection at the grassroots level. Ushuru Mashinani recognizes the diverse needs and priorities of different local communities and offers customized solutions that are best suited to these audiences.
eTiMS is a flexible solution that offers a variety of integration solutions, including the use of mobile phones, windows, tablets, POS online solutions and ERP systems.
If you fail to file your tax returns on time, you may be subject to penalties and interest charges. These charges can add up quickly, making it even more difficult to get your tax compliance certificate.
Filing your income tax returns annually is an important responsibility that will help a taxpayer claim refunds, avoid penalties and interest, and provide proof of income when needed.
By law all wines, spirits, beer, bottled water, juices, soda, energy drinks, cigarettes and other tobacco products must be marked with excise tax stamps.
In this episode, our expert Soila is breaking it down for easy understanding of the Soma Label App. Remember excise tax stamps possess a number of security features and are all uniquely numbered with encrypted data codes. The codes are linked to a track & trace system holding information for each product individually.
With VTDP, you can make a disclosure about your individual income tax, Pay As You Earn, (PAYE) withholding taxes, capital gains tax, value added tax, turnover tax, advance tax, excise duty, rental income tax and corporation tax. It gives an opportunity to everyone to come forward voluntarily and disclose the taxable income.
Kenya Revenue Authority (KRA) continues to stand out as a socially inclusive institution and an employer of choice for many reasons. Diversity and social inclusion are definitely part of this discourse.
We understand the unique needs of an inclusive workforce, and believe that persons with disabilities should be provided with a supportive environment to enable them express their unique abilities and talents so that they live a decent life and none is left behind," said. Patience Njau-Nyaga (Mrs) the Deputy Commissioner Human Resource.
The deadline for the requirement by taxpayers to comply with regulations of the Tax Invoice Management System (TIMS) has been extended to 30th September 2022. The deadline extension is an administrative decision necessitated by taxpayers' request for more time to acquire and activate their TIMS devices in compliance with Electronic Tax Invoice (ETI) Regulations that were gazetted on 25th September 2020, Legal Notice 189.
The overall objective of introducing TIMS vide VAT (Electronic Tax Invoice) Regulations, 2020 is to increase VAT compliance, minimize on VAT fraud and increase tax revenue.
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The Tax Summit is an annual dialogue platform for exchanging ideas, knowledge, insights and solutions to support efficiency and effectiveness in tax administration. This year's Summit is the 8th and is themed "Now & Beyond: Enhanced Service Delivery to Improve Tax Compliance'' will drive public and international dialogue around entrenching risk-based tax compliance, enhancing trade facilitation, and positioning KRA as a service-driven agency for the future.
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The Tax Summit is an annual dialogue platform for the exchange of ideas, knowledge, insights and solutions to support efficiency and effectiveness in tax administration.
This year's Summit is the 8th and is themed "Now & Beyond: Enhanced Service Delivery to Improve Tax Compliance'' will drive public and international dialogue around entrenching risk-based tax compliance, enhancing trade facilitation, and positioning KRA as a service-driven agency for the future.
PAYE is a method of collecting tax from individuals, both Resident and Non-resident, in gainful employment.
Gains or Profits include wages, casual wages, salary, leave pay, sick pay, payment in lieu of leave, fees, commission, bonus, gratuity, subsistence, traveling, entertainment, or other allowance received in respect of employment or services rendered.
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The Tax Invoice Management System (TIMS) is an upgrade of the current Electronic Tax Register (ETR) regime that was rolled out in 2005.
It will facilitate electronic tax invoice management through standardization, validation, and transmission of invoices to KRA on a real-time or near real-time basis.
All VAT-registered taxpayers are required to comply.
The effective rollout date is 1st August 2021
To learn more https://kra.go.ke/en/helping-tax-payers/faqs/electronic-tax-invoice
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To report a crime visit https://iwhistle.kra.go.ke/welcome/
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CGT is tax that is levied on transfer of property situated in Kenya, acquired on or before January 2015. It is declared and paid by the transferor of the property.
To learn more https://www.kra.go.ke/individual/filing-paying/types-of-taxes/capital-gains-tax
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To learn more https://www.kra.go.ke/en/individual/filing-paying/types-of-taxes/individual-income-tax
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This second episode on Filing 2021 returns focuses on:
- Spouse declaration of taxes
- Personal Relief
- Filing amended return
- How to confirm you have filed- view filed returns
- Penalties for not filing
To learn more https://www.kra.go.ke/en/individual/filing-paying/types-of-taxes/individual-income-tax
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An individual income tax return is a declaration of income earned by an individual within a particular year. Every individual with a KRA PIN is required to file this return. You can file your Individual Income Tax Returns for a particular year of income, anytime between 1st January to 30th June of the following year.
Submission of income tax returns via https://itax.kra.go.ke/KRA-Portal/
To learn more https://www.kra.go.ke/en/individual/filing-paying/types-of-taxes/individual-income-tax
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A payment plan is an agreement with KRA to pay the taxes you owe within an extended timeframe. You should request a payment plan if you believe you will be able to pay your taxes in full within the extended time frame.
For further information and facilitation, please contact the Contact Centre on Tel:020 4999 999, 0711 099 999 or Email callcentre@kra.go.ke.
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Listen in as we discuss Alternative Dispute Resolution, episode 2. Listen to the last episode here https://anchor.fm/dashboard/episode/e19uupu
ADR is a voluntary, participatory, and facilitated discussion over a tax dispute between a taxpayer and the Commissioner. It is in the form of facilitated mediation and not arbitration as envisaged in the Arbitration Act, (Chapter 49 Laws of Kenya), as the facilitator has no power to impose any decisions regarding the outcome of the tax dispute. Instead, the parties are facilitated to find a solution to the dispute.
Overall, ADR seeks to enrich the entire dispute resolution process by providing flexibility and timely/early dispute management without the limitations imposed by judicial and quasi-judicial processes as regards technical procedures, untimely decisions, and the rising costs of litigation.
Today, ADR is widely favored over litigation and applied in a number of Tax Revenue Administrations globally with great success. This Framework has been benchmarked against the experiences of these Tax Revenue Administrations.
To learn more https://kra.go.ke/en/individual/alt-dispute-resolution-adr/learn-about-adr/about-adr
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ADR is a voluntary, participatory, and facilitated discussion over a tax dispute between a taxpayer and the Commissioner. It is in the form of facilitated mediation and not arbitration as envisaged in the Arbitration Act, (Chapter 49 Laws of Kenya), as the facilitator has no power to impose any decisions regarding the outcome of the tax dispute. Instead, the parties are facilitated to find a solution to the dispute.
Overall, ADR seeks to enrich the entire dispute resolution process by providing flexibility and timely/early dispute management without the limitations imposed by judicial and quasi-judicial processes as regards technical procedures, untimely decisions, and the rising costs of litigation.
Today, ADR is widely favored over litigation and applied in a number of Tax Revenue Administrations globally with great success. This Framework has been benchmarked against the experiences of these Tax Revenue Administrations.
To learn more https://kra.go.ke/en/individual/alt-dispute-resolution-adr/learn-about-adr/about-adr
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A foreign supplier of digital services without a fixed place of business in Kenya (overseas supplier) to a recipient in Kenya may register under the simplified tax registration framework via the iTax portal; itax.kra.go.ke/KRA-Portal/
- The User guide for the simplified registration process is accessible on the KRA Website using this link; https://www.kra.go.ke/images/publications/USERGUIDE---DST-NONRESIDENT-REGISTRATION-REVIEWED-FINAL-18.12.2020-1.pdf
- Upon successful registration on iTax, the digital service supplier will be able to file the tax return and make payment for the VAT due within the stipulated timelines.
If a non-resident without a fixed place of business in Kenya (overseas supplier) chooses not to register through the simplified registration framework, they SHALL appoint a tax representative.
The tax representative shall be responsible for performing any tax obligations required, including the submission of returns and the payment of taxes with respect to the VAT on the Digital marketplace Supply.
To learn more https://kra.go.ke/en/helping-tax-payers/faqs/vat-on-digital-marketplace-supply
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Each year we dedicate the month of October to appreciate taxpayers for their contribution to national development. Taxpayer’s Month is an annual event that brings together distinguished taxpayers from various sectors of the economy.
This year, Taxpayer’s month theme is “Pamoja Twaweza” highlighting the efforts Kenyans have put in place to fight the Covid-19 pandemic and to ensure post-pandemic economic recovery, hence revenue recovery.
In October, we will execute various engagement activities throughout the month. These activities are aimed at promoting revenue collection through the exchange of knowledge and expertise related to tax administration during Tax Summit sessions and Ushuru Mashinani bus tour. In addition, Customer Service Week (CSW) will kick off from 4th October to 8th October. The theme is The Power of Service. And the Annual Tax Summit (ATS) which will be held virtually on the 13th and 14th of October. The theme for this year’s summit is Redefining the Taxation Landscape: Global Trends, Developments, and Impact. Lastly, we will have Taxpayers Day (TPD) where top Taxpayers in various categories are awarded for compliance. #PamojaTwaweza #TaxpayersMonth2021
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The Tax Invoice Management System (TIMS) is an upgrade of the current Electronic Tax Register (ETR) regime that was rolled out in 2005.
It will facilitate electronic tax invoice management through standardization, validation, and transmission of invoices to KRA on a real-time or near real-time basis.
All VAT-registered taxpayers are required to comply.
The effective rollout date is 1st August 2021
To learn more https://kra.go.ke/en/helping-tax-payers/faqs/electronic-tax-invoice
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Facebook: https://www.facebook.com/KRACare/?ref=page_internal
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Youtube: https://www.youtube.com/channel/UCbNSvsHFoQ4QnRj4K60eBhQ
Email: callcentre@kra.go.ke
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Voluntary Disclosure Programme is a programme where a taxpayer confidentially discloses tax liabilities that were previously undisclosed to the Commissioner for the purpose of being granted relief of penalties and interest of the tax disclosed.
Where the Commissioner is satisfied with the facts disclosed in the application, the taxpayer shall be granted a relief of the interest and penalty due on the tax disclosed and paid as follows-
- 100% remission where the disclosure is made and tax liability paid in the first year of the programme
- 50% remission where the disclosure is made and tax liability paid in the second year of the programme
- 25% remission where the disclosure is made and tax liability paid in the final year of the programme
To learn more https://kra.go.ke/en/helping-tax-payers/faqs/voluntary-tax-disclosure-programme
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Turnover Tax is a tax charged on businesses whose gross turnover is more than KES 1,000,000 but less than KES 50,000,000 in any given year.
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Who should file and pay for Income Tax?
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Did you know that Section 5A (2) of the Kenya Revenue Authority Act of 1995 introduced a reward of KES 500,000 to any person who provides information, that leads to enforcement of tax laws?
That is; where the information provided leads to the identification of unassessed duties or taxes identified, whichever is less.
where the information provided leads to the recovery of unassessed duties or taxes. This law stipulates a reward of KES 2 million or 5% of the taxes or duties recovered, whichever is less.
Log on to https://iwhistle.kra.go.ke/welcome/and report any corruption or tax relatedcrimes.
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Taxation of rental income under the annual regime
- Rent is charged on the actual amount received.
- Expenses incurred to generate rent are allowed under section 15 of the Income Tax Act.
- Tax is calculated under the annual individual graduated scale or corporate rate of 30%.
- Rent on non-residential buildings(Commercial) is a taxable supply under the VAT Act(No.35 of 2013)- Laws of Kenya.
Who qualifies for monthly rental income?
- Any resident person (individual or company).
- The tax applies to rental income earned for the use or occupation of a residential property.
- Landlords earning residential rental income of between Kshs 288,000 p.a and Kshs. 15M p.a.
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The digital service tax will be paid by the digital service provider whether overseas or locally in Kenya. The provider of the digital service will file a return and pay the DST. Overseas entities can appoint a tax representative in Kenya to register, file, and pay digital service tax on their behalf.
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For a taxpayer to qualify for a waiver application all the principal taxes must be fully paid before an application can be lodged for consideration for a waiver. To qualify for a waiver, the taxpayer has to be compliant in all taxes concerning filing and payment of taxes. The applicant’s past compliance record is taken into account when processing the waiver application.
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The Residential Rental Income upper threshold has been increased from KES 10 million to KES 15 Million per annum.
The lower threshold has been also increased from KES 144,000 to KES 288,000 per annum to align with the current lower individual tax band.
This is aimed at providing an opportunity for more landlords to comply with the simplified regime which has minimal compliance costs.
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Forwarded parcels may be re-assessed if the owner disputes the tax values and produces the actual invoice/receipt to determine actual values of the items. During assessment, the customer produces the transaction value/invoice/declared value if they have none.
Different items attract different rates. The taxes payable include import duty 0%, 10%, 25%, VAT-14%, Excise duty 10% or calculated depending on the item, Import Declaration Form (IDF) 3.5% and Railway Development Levy (RDL) 2% .
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Voluntary Disclosure Program (VDP) is meant to provide an avenue for taxpayers with undisclosed income to disclose the same without undue imposition of punitive penalties and interest. It is aimed at improving revenue collection by bringing more taxpayers from the underground economy into the tax net.
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Introduction of Digital Service Tax (DST) does not amount to double taxation. As a matter of principle, taxes are levied in the country where the income is sourced or derived. If, for example, company A sells a product or service in Kenya, the tax will be due in Kenya where the income is derived or sourced.
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Minimum tax is a new taxthat has been introduced by the Finance Act, 2020, Is a base income tax, payable by all persons regardless of whether or not they make a profit. For instance, if the year of income ends December, then instalments shall be due on the 20th of April, 20th of June, 20th of September and 20th of December. https://www.kra.go.ke/images/publications/Brochure--Minimum-Tax.pdf
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Welcome to the first episode of Tubonge Tax your all-round podcast on Taxes brought to you by the Kenya Revenue Authority. Tubonge Tax will unpack the tax myths, jargons and leave you more enlightened on how, when and which taxes to pay and file. Tubonge Tax promises to give you comprehensive tax analysis, equip you with tax knowledge and empower you to make informed decisions on tax matters.
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