In this episode recorded on 22.11.2023 and hosted by Joe Mwaniki, we are joined by Ernest Muriu - Audit Partner, Ernest & Martin Associates and Hakamba Wangwe - Chief Manager eTIMS, KRA for a conversation on the implications of the mandatory eTIMS registration.
We also cover turnover tax registration, exemptions from electronic tax invoices, implications of failing to onboard on eTIMS, and capacity building for KRA staff.
Below are some nuggets from the podcast:
“If you are working in an environment where you have business-to-business transactions, and if you do not comply, then you become another person's inconvenience. Probably that other person will feel uncomfortable doing business with you because it means then if they do business with you, that's an expenditure or transaction that they cannot be able to account for in their income tax returns.”
“We have provisions for determining when the tax point is, especially for VAT purposes. The tax point is when you either issue an invoice, receive payment, whether fully or partially, whether you've completed the service, or whether you've received a certificate of completion, if you're thinking of maybe a construction service, then whichever comes earlier, that's when you're supposed to declare that invoice. If it takes long to be paid, the law says, once you complete the service, then that's when the tax point applies. And that's when you need to declare it.
“If you are making sales amounting to 5 million in a year, then you are required to register for VAT purposes…For TOT, the turnover tax, your sales should be between Kshs 1 Million and Kshs 25 Million. The rate is 3 percent for turnover tax. It's supposed to be paid based on the total turnover for the previous month multiplied by 3%. That's what you declare in your turnover tax return by the 20th of the next month.”
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00:03:19 What is eTtims?
00:11:12 eTIMS Solutions for Various Taxpayers
00:18:33 Implications of Failing to Onboard on eTIMS
00:25:52 Generating an Electronic Tax Invoice
00:31:43 Other eTIMS Functionalities and Non-VAT Invoices
00:40:13 VAT and Turnover Tax Registration
00:58:17 Compliance Rates and Lessons From TIMS
01:03:02 Trade Facilitation and Capacity Building
01:11:43 Tax Compliance and Small Businesses
01:15:30 Closing Thoughts