Finally, the long-awaited Tax Procedures (Electronic Tax Invoice) Regulations 2024 have been gazetted!

Impact

Here are three key takeaways:

1. The previous proposal to exempt businesses with annual turnover below Kes 5.0M has been scrapped. Consequently, all businesses are now required to issue eTIMS invoices in accordance with Sec23 of the Tax Procedures Act. Additionally, Sec16 of the Income Tax Act regarding deductible expenses applies universally.
2. There is now clearer guidance on exemptions from eTIMS under Sec10. Notably, expenses subject to withholding tax as a final tax, such as dividends and interest, are excluded from mandatory requirements. Similarly, services provided by non-residents without a permanent establishment in Kenya are also exempted, addressing concerns about the need for eTIMS invoices for services rendered outside the country.
3. Businesses operating in Kenya must ensure compliance with the Electronic Tax Invoice Regulations, 2024. Unless exempted, registration on TIMS/e-TIMS is mandatory. Any system transition, such as from TIMS devices to e-TIMS, requires written notification to the KRA. It's crucial for businesses to receive TIMS/e-TIMS-compliant invoices to qualify for corporate income tax deductions. Regular system checks and maintenance are essential to meet regulatory requirements effectively.

Penalties under the Regulations include committing an offense by failing to comply with its provisions. Offenders face a penalty of twice the tax due.