FINANCE optional when generating an invoice and is only applicable where the purchaser intends to claim input tax for the VAT paid ; Control Unit serial number - a unique number issued by KRA to identify each tax register ; Control Unit invoice number - a unique number generated by the tax register upon issuance of each tax invoice ; and Quick Response ( QR ) Code - to confirm the validity of the tax invoice .
Confirmation of compliance
By adopting a compliant ETR , you need to select and get in touch with one of the approved ETR suppliers as advertised on the KRA website . Once you acquire a compliant ETR , the device will be auto activated through iTax to enable invoice validation and transmission to KRA . In order to activate the ETR , the VAT taxpayer is required to acknowledge the ETR assigned to them by responding to the confirmation email from iTax
Benefits for complying
There are numerous benefits accruing from compliance including fostering a fair business environment , pre-filled VAT return - simplified return filing , faster processing of VAT refunds , and nonintrusive verification of tax matters .
Types of TIMs machines
There are different types of TIMS machines : Type A : suitable for small business entities whose record keeping is manual and those who do sales on the move , e . g . van sales since the ETR is portable ; Type B : suitable for retail outlets and shops using point of sale terminals ; Type C : suitable for businesses that have automated their operations and are using software billing systems / ERPs ; and Type D : suitable for all types of business entities .
Where |
a |
taxpayer |
replaces |
the |
existing |
tax |
register , |
they |
are |
required |
to |
safeguard |
the |
previously used tax register in line |
with requirement to keep records |
for five years as stipulated under |
the provisions of the Tax Procedures |
Act , 2015 . |
In case of internet downtime , a taxpayer should continue using the tax register as usual . Once the internet connectivity is restored , the invoices generated and stored in the tax register ’ s memory will be automatically transmitted to KRA .
Where to acquire the devices
The list of the approved Electronic Tax Register suppliers and their manufacturers from whom VAT registered taxpayers can obtain the required registers has been published on the KRA website . This is accessible via this link : https :// kra . go . ke / images / publications / List-of- Approved-ETR-Suppliers-as-at-14th- December-2021 . pdf
Penalties for non-compliance
Failure to comply with any of the Regulations will result in penalties as specified in Section 63 of the VAT Act ( 2013 ). This is imposition of a fine not exceeding one million shillings , or to imprisonment for a term not exceeding three years , or to both .
Way forward
In order to manage potential tax exposures , it is of paramount importance for all liable persons to plan , put in place structures and migrate into the new system within the set timelines . Being a new system , teething challenges are expected in the early days before the system becomes fully operational . ■