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Table of Contents
The government has introduced e-Invoicing solutions through TIMs and E-Tims. There is a misconception out there driven by the media that some taxpayers especially those not registered for VAT are exemptions.
All taxpayers unless expressly exempted e.g. those on employment are expected to comply. That said, how will the e-Invoicing through TIMs and E-Tims affect your tax bill?
But first …
How will you comply?
- Onboarding – get TIMS or download the e-Tims App.
- All sales are expected to be made through TIMs and E-Tims.
What are the likely Effects:
As indicated above, the likely effects will depend on the taxpayer and the actions they will take. The following five effects are likely to take place but this does not mean that these are the only effects. There are many others out there. Some will become apparent as time progresses.
a. Decrease in Cost of Compliance
Your sales and purchase data will be transmitted directly to the tax commissioner. When filing the tax returns, you will only need to confirm the data. This you can do anytime from the end of the tax period e.g. month for VAT or year of income for Income Tax 24/7.
b. Loss of Business
For those people whose business is offering services being taken over by the IT systems for example those offering tax returns filing etc. may lose that business. However, they need to do more and they will still be able to continue with the business.
c. Loss of Jobs
There are many Kenyans employed in businesses that offer the services that are being taken over by TIMs and E-Tims. They need not worry though there will be reduced work. They need to look around and discover what else they can do.
d. Decreased Tax Bills
All sales should be reported. This means that all your purchases will be reported and credited to your tax ledger with the tax Commissioner. This means that for example, you will have more VAT input for your VAT compliance and more expenditure for your income tax. This will reduce your tax bills.
e. Increased Tax Bills
All sales are expected to be reported to the tax Commissioner. So, for those people who do not report all sales to the tax Commissioner, those sales will likely be reported by the customers or clients. Additionally, if you do not purchase from suppliers who are on TIMs and E-Tims, your purchases will not be captured.
The tax Commissioner is clear on the purchases that will be allowed are only those that are on i-tax through TIMs or E-Tims. If your purchases have not been reported and credited to your ledger on iTax, then you will not be able to use those purchases and your expenditure will be low hence resulting in increased tax bills.
What to do?
The problem is not the decrease in the tax bill but the increase in the tax bill. You need to look at who your suppliers are. If they are not on TIMs and E-Tims, then you may need to encourage them to onboard or you look for other suppliers.
Thank you for reading the post.
dr. wakaguyu W.K.
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