Kenya is the latest country looking to regulate its invoice issuance process by implementing its own Continuous Transaction Controls (CTC).

According to information from 16th July 2019 from the Kenya Revenue Authority (KRA), all traders, manufacturers and suppliers that generate over 5 million Kenyan Shillings per month (approximately €43 000) will be obliged to install electronic tax registers (Control Units). These Control Unites will communicate invoice data with the new system, called Tax Invoice Management System (TIMS), in real time. The TIMS will receive both individual transactions as well as end-of-day reports from Control Units and pass them to the KRA’s iTax system.

“The roll out will enable seamless population to the taxpayers VAT returns hence reducing filing errors and ultimately reducing the cost of tax compliance,” KRA said in their notice.

What is the current status of the TIMS program?

The TIMS pilot phase started in June 2019 and will continue until December this year, operating on voluntary basis with businesses. According to the KRA, the private sector’s comments and feedback will be incorporated into the system, while all flaws identified during the pilot phase will be fixed before the full roll out. A final date for the full rollout has not yet been set.

What is the Control Unit?

The Control Unit (CU) is a piece of hardware certified by the KRA, that all businesses will have to install on their electronic tax register (ETR) or point-of-sale devise (PoS), or otherwise integrate with their ERP or billing system. The CU will validate and sign the invoice data before transmitting the information to the TIMS according to the supplier’s schedule. However, data must be transmitted in time for end-of-day reporting that is produced by the CU. Once validated and approved, the CU will return to the issuer additional values which the supplier must include on the invoice distributed to the buyer.

How will this change impact the buyers?

Currently, there are no explicit requirements posed on the buyers. However, it is highly recommended that buyers adjust their processes and systems to the new invoice content requirements to ensure that they are receiving and handling correctly-issued invoices.

In our communication with the TIMS team of the KRA, they have confirmed that changes will be made to the VAT Act in order to reflect the above-mentioned novelties and how this will impact the obligations of both the suppliers and the buyers.

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