KRA NEW TAX INVOICE MANAGEMENT SYSYTEM (TIMS)
Tax Invoice Management System (TIMS)
Recently, businesses in Kenya have encountered massive transformation due to the actualization of the progressive Digital Economy. As such, it is critical for businesses in Kenya to adopt and ensure digitization, to ensure that they stay ahead and at per with the economic curve.
One of the major pillars of digitization is digital invoice recording. KRA (Kenya Revenue Authority) has demonstrated immense interest regarding the regulation of tax records kept by businesses, government regulators, and individuals.
What Is TIMS?
TIMS is the vital backbone of the electronic tax invoice. Electronic tax invoice generation will be attained using tax registers meant to integrate the systems of the registered traders and have the capacity of data validation and ensure data transmission to Kenya Revenue Authority on near real time basis or on a real time.
By so doing, the system will address the matters of arising variations in invoices as it enhances VAT data accuracy on information of purchases and sales transactions.
TIMS require internet connection for data transmission. Nevertheless, if there occurs internet disruption, traders are required to continue with the operations since invoice data validation does not need internet connection. Upon restoration of the connectivity, the generated invoices will be transmitted automatically to Kenya Revenue Authority (KRA).
The Kenya Revenue Authority has introduced and enforced the Tax Invoice Management System (TIMS) to enhance compliance. The compliance is attained through enhanced accuracy, improved management of records and minimized any probable challenges during the reconciliation of Value Added Tax (VAT).
To evade imposition of penalties as stated in Section 63 of the VAT Act, 2013, all registered VAT taxpayers are required to comply with the Electronic Tax Invoice (VAT), 2020.
The Kenya Revenue Authority issued a public notice on 1st August 2021, rolling out the requirements for the tax invoice. It was clearly stipulated in the notice that the general public had a twelve-month compliance window with the new tax invoice requirements. The timeline was to make it possible for the taxpayers to transition from the old ETR to the new TIMS (Tax Invoice Management System).
Are you having trouble comprehending the TIMS requirements? You should worry no more. We have tax experts who dedicate their time online to help you with all your tax questions. This is applicable to new business owners, businesses finding it challenging to implement the TIMS requirements, a business that requires training for their staff, and individual taxpayers.
Benefits Of Implementing TIMS (Tax Invoice Management System)
The following are 5 ways in which TIMS will help entities:
ü Enhance Effectiveness and Efficiency
Entities that adopt the Tax Invoice Management System (TIMS) can expect enhance filling and keeping records and follow ups on all VAT records. TIMS has immensely reduced the straining and tedious paperwork, the manual system.
The general maintenance and operation cost of the Tax Invoice Management Systems device is anticipated to be allied with the benefits of the devices and noticeably lower compared to the paperwork system, the manual system.
ü Minimized Fraud
TIMS establishes a direct connection between your business and the tax agency, Kenya Revenue Authority. After each and every single transaction, the data is transmitted to the tax agency on time. Additionally, the systems are secure. However, in the event the device is stolen or broken, you can easily and conveniently retrieve data. Moreover, the data collected with every transaction entered can also be utilized to show compliance with the regulations of the Kenya Revenue Authority.
ü Easier Auditing of Sales
The Tax Invoice Management System will immensely affect the audit and sales sector since it provides a clear record for all the goods and services that are VAT-able. Also, the system allows for real-time filling of every VAT transaction carried out y entities. By so doing, the system provides room for enhanced audit of sales.
Additionally, the frequency of auditing sales has been reduced to hourly or daily giving room for prompt feedback and adopting effective and efficient sales patters to ensure maximum returns. Also, the frequency allows the business owners identify shortcomings and strength of the business regrading sales.
ü Reduction Of Filling Cost
TIMS, Tax Invoice Management System, will help entities in Kenya minimize costs of filling and keeping records. TIMS will reduce the overall collection cost while enhancing the quality of services and business operations. There is a clear record of every VAT transaction, the data is safely stored and can be conveniently retrieved by the entity to prove Tax compliance when required by the Kenya Revenue Authority.
ü Minimize Tax Leakage
Tax Invoice Management System will aid in ensuring businesses reduce tax leakage and attain compliance with the taxman. The system is well integrated with KRA system to ensure that data is efficiently transmitted to Kenya Revenue Authority in real time and see to the confidentiality of tax records for the various businesses.
It is a legal requirement for entities to ensure transition from the old ETR system to the new system and have suitable structures and controls that will enhance compliance with the regulations provided by the Kenya Revenue Authority.
We understand that businesses are likely to face challenges during this period. It is vital for entities to be fully familiar and put in place functional structures to see to compliance. We are here to provide support and training to your staff on how to use the new TIMS device.
It is vital to note that compliant tax registers are automatically activated, thus, there is no need for VAT taxpayers to take their registers for activation at KRA. In the events there are changes in VAT rates, there will be automatic update on the tax registers.
At DennyKins & Associates, we are dedicated to ensuring businesses have an easy time during their operations while aiming at attaining compliance. Do not stress any more, reach out to us via call or email and have a tax expert solve your problems. We have a support team that ensures you get help as long as you are in operation.