Businesses to Fully Switch to Electronic Invoices Starting June 1

Starting on June 1st, 2023, all VAT-registered businesses must only accept electronic invoices from registered taxpayers.

The move is compliant with the VAT (Electronic Tax Invoice) Regulations 2020 for the purposes of claiming input tax and processing refunds, according to a statement from the KRA Commissioner General.

The Commissioner General stated that tax compliance certificates won’t be given to VAT-registered taxpayers who failed to comply with the obligation by June 1 unless they do.

“VAT refunds shall be only processed and paid for taxpayers who are compliant with the Regulations,” read the statement.

Registered non-resident suppliers of digital services are excluded from this requirement.

However, non-resident digital service providers must submit invoices or receipts that detail the cost of the provision and any taxes that were applied.

The deadline is set at the same time that the Kenya Revenue Authority (KRA) is continuing to roll out the electronic Tax Invoice Management System (eTIMS), which aims to ensure that all VAT-registered taxpayers produce electronic tax invoices that are delivered to KRA in real-time.

Businesses will get access to real-time invoice transmission through connection with eTIMS, ensuring accuracy in tax invoice declarations and reconciliation between filed returns and payments.

As all transactions will be transparent to the taxman, KRA is relying on the platform to adequately address the issues of missing trader invoices and fabricated claims.

The taxman seeks to charge the platform an additional Sh400 billion in VAT.

The amount of VAT collected for the fiscal year that ended in June 2022 was Sh523.10 billion, or 27.72 percent of the Sh1.92 trillion in regular income.