Regulatory updates - Kenya

On 3 May 2024, the Cabinet Secretary for the National Treasury and Economic Planning announced the Tax Procedures (Electronic Tax Invoice) Regulations 2024 in the Kenya Gazette.

The framework is the same as last year and includes additional clarifications while revoking the Electronic Tax Invoicing Regulations 2023. The main areas of clarification include but are not limited to the following.

The application and the users’ obligations

• The Authority’s system meaning a system prescribed by the Commissioner, i.e. the authority;
• Each System should display messages in English or Kiswahili;
• The Commissioner may require the following persons to use a system that does not maintain a record of stocks:
  • Persons providing services
  • Persons not registered under the VAT Act with an annual turnover of less than 25 million KES (ca. EUR 176 000), using a simplified system prescribed by the Commissioner
  • Any other person using a system prescribed by the Commissioner;
• In the event of an unplanned business closing, the Commissioner must be notified within seven days after the closing.

Invoice content

• Tax invoices should include the buyer’s Personal Identification Number (PIN) when the buyer intends to claim the expense or the input tax, the applicable tax rate, and a QR code.

Excluded transactions

• New transactions are added to the list of exclusions from the requirement of an electronic tax invoice, e.g., fees charged by financial institutions and expenses subject to withholding final tax;
• Specifying transactions on the list, such as investment allowances, including internal accounting adjustments and services provided by a non-resident person without a permanent establishment in Kenya.

The available eTIMS solutions are listed on the Kenya Revenue Authority’s website.

On 27 December 2023, the Kenya Revenue Authority (KRA) published a public notice informing non-VAT registered taxpayers that the onboarding to the electronic Tax Invoice Management System eTIMS has been extended until 31 March 2024.

During this time, the applicable penalties for not issuing electronic tax invoices will not be imposed on non-VAT registered taxpayers.

Once onboarded, the taxpayers must successively capture manually generated invoices and receipts issued after 1 January 2024 until the onboarding date to KRA’s system.

On 17 November 2023, the Kenya Revenue Authority (KRA) published its public notice about onboarding non-VAT registered taxpayers on the electronic Tax Invoice Management System (eTIMS).

All business entities, including entities not registered for VAT, will have to electronically generate and transmit their invoices to KRA via the eTIMS.

Deduction of expenses for tax purposes not generated through eTIMS will not be allowed starting from 1 January 2024.