KRA Waives Tax Penalties For Small Businesses To Allow ETIMS Registration

• KRA has set January 1, 2024, as the deadline for non-VAT registered businesses to begin transmitting their invoices through eTIMS
• To allow small businesses enough time to onboard eTIMS, KRA has waived tax penalties for those who will not have registered by January 1
• Businesses will be required to provide all their invoices for transactions completed from January 1 to the date they onboard eTIMS

Elijah Ntongai, a journalist at TUKO.co.ke, leverages more than three years of expertise in financial, business, and technology research, providing insights into both Kenyan and global economic trends.

The Kenya Revenue Authority (KRA) has announced a reprieve for non-VAT registered businesses, waving penalties to give them additional time to transition onto the Electronic Tax Invoice Management System (eTIMS) platform.

The waiver, effective until March 31, 2024, extends a lifeline to businesses yet to onboard onto the eTIMS platform, facilitating real-time invoice filing and submission to KRA.

"KRA wishes to notify non-VAT registered taxpayers that onboarding to the eTIMS platform will be available up to 31st March, 2024," said KRA in a statement.

Tax penalties waived

KRA emphasised that during this period, penalties for non-compliance in issuing electronic tax invoices will not be imposed on these taxpayers as stipulated by the law.

"During the onboarding period, penalties provided in law for failure to issue electronic tax invoices will not be imposed on the non-VAT registered taxpayers," KRA said.

KRA's move aligns with an earlier directive mandating all businesses, regardless of VAT registration status, to electronically generate and transmit invoices to the tax authority through the eTIMS platform starting September 1, 2023.

Furthermore, KRA has set January 1, 2024, as the deadline for non-VAT registered businesses to begin transmitting their invoices through eTIMS.

"With effect from 1st January, 2024, any business expenditure not supported by a valid electronic tax invoice shall not be deductible for income tax purposes," read the KRA notice.

Expectations after onboarding

Although KRA has waived penalties over the period provided for onboarding, businesses will be required to furnish all their invoices for transactions completed from January 1.

"Once onboarded, the taxpayers will be required to progressively capture manually generated invoices and receipts issued after 1st January, 2024 up to the date of onboarding, onto the KRA system," KRA explained.

Understanding eTIMS and the onboarding process

Additionally, TUKO.co.ke analysed the eTIMS earlier, and KRA has been conducting educational webinars to guide businesses through the onboarding process onto the eTIMS platform.

TUKO.co.ke further detailed the consequences businesses will incur for failing to integrate the eTIMS system into their business transactions.

Some companies have also declared that they will not buy from suppliers who have not onboarded eTIMS into their businesses.