On 5 October 2021, the Kenya Revenue Authority (“KRA”) issued a public notice providing guidance on the implementation of the Value Added Tax (Electronic Tax Invoice) Regulations 2020.
The KRA notified that to facilitate VAT-registered taxpayers to comply with the Regulations, they have issued:
- A guideline
- A list of approved Electronic Tax Register Suppliers and Manufacturers
Dates and time
- The electronic tax invoice was rolled out from 1 August 2021.
- All VAT-registered taxpayers are required to comply with the Regulations within 12 months from the date of the rollout.
- If a person cannot comply with the requirements within 12 months, a taxpayer can apply to the Commissioner for an extension of time. The application for extension must be made 30 days before the expiry of the 12 months specified.
- The extension will be given for a period not exceeding six months.
Tax Register Requirement
All VAT-registered taxpayers are required to use a compliant tax register with the following functionalities:
- Check the invoice details (tax rate, taxable value, total tax and total gross amount) before issuing the tax invoice to the customer.
- Transmission of the validated tax invoices to KRA over the internet on a real-time or near real-time basis.
Approved list of Electronic Tax Register suppliers and manufacturers
A list dated October 2021 was published together with this notice.
You can access the list below:
Features of a valid Electronic Tax Invoice
- Buyer PIN – refers to the PIN of the purchaser. The capture of the buyer’s PIN is 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.
- Quick Response (QR) Code – to confirm the validity of the tax invoice
Compliant tax registers will have the capability to generate credit and debit notes referencing the original tax invoice.
Note: It is the responsibility of the buyer to provide their PIN details to be captured in the invoice where they intend to claim input tax.
Electronic Tax Register Options
The VAT-registered taxpayers can adopt the following electronic tax register options at their discretion:
- An integrated tax register – this is an ETR with inbuilt functionality to validate, generate and transmit tax invoices to KRA.
- An independent tax register connected to the invoicing system to validate and transmit tax invoices to KRA. This includes the upgraded Electronic Signature Device (ESD).
- A centralised tax register – connected to more than one cashier till (one to many).
Obligations regarding previous tax registers
Under section 23 of the Tax Procedures Act, a taxpayer replacing an existing tax register with a new one is required to keep and maintain records for five years. This includes records found in the previously used tax register