KRA TIMS and eTIMS Solutions are in today’s dynamic business landscape meant to ensure compliance and streamline all tax processes.
Evolution of Tax Invoice Management:
TIMS was conceived as a means to bolster the existing Electronic Tax Register (ETR) regime established in 2005. Its primary objective was to ensure that all businesses issue valid tax invoices, thereby enhancing tax transparency and accountability. VAT registered taxpayers were mandated to onboard onto the TIMS platform, which seamlessly integrated with the iTax platform, facilitating smoother tax administration processes.
Building upon the foundation laid by TIMS, eTIMS represents a leap forward in tax compliance technology. Unlike its predecessor, eTIMS is a web-based solution designed to ensure comprehensive tax compliance across the board. What sets eTIMS apart is its adaptability – rather than requiring the purchase of new hardware devices, eTIMS can be installed on existing computers, laptops, and mobile phones, or accessed online. This versatility makes it a more convenient and flexible option for businesses of all sizes.
Who Needs to Comply:
The scope of compliance has expanded with the introduction of eTIMS. While previously only VAT registered taxpayers were required to be TIMS compliant, the amendment now extends the mandate to both VAT registered and unregistered individuals or entities. Effective from January 1st, 2024, all businesses must ensure eTIMS compliance to avoid penalties and ensure smooth operations.
TIMS/eTIMS compliance is particularly crucial for individuals or companies engaged in various trading activities, including those earning residential rental income, registered for Turnover Tax (TOT), with an annual turnover below KShs 5 million, or dealing in exempt or zero-rated goods or services. Additionally, businesses that faced challenges integrating TIMS devices but are now transitioning to eTIMS must ensure compliance to avoid disruptions and penalties.
Understanding eTIMS Solutions:
One of the key distinctions between TIMS and eTIMS is the shift from hardware to software solutions. While TIMS necessitated the purchase of specific hardware devices, eTIMS offers a range of software options tailored to different business needs:
- eTIMS Single Paypoint (Windows): Ideal for businesses operating from a single location with a single cashier till, this software includes a stock management module and runs on Windows 10 and above.
- eTIMS Multi-Paypoint (Windows): Suited for businesses with multiple locations and paypoints/tills, this software also features a stock management module and is compatible with Windows 10 and above.
- eTIMS Mobile App (Android): Designed for small and micro-enterprises with an annual turnover below KShs 5 million, this Android app caters to businesses on the move.
- eTIMS Online Portal: Tailored for service sector businesses with limited monthly transactions, this portal offers browser-based accessibility.
- System-to-System Integration: For businesses seeking seamless integration with their billing systems, this option allows for direct connectivity with the eTIMS platform through approved integrators.
Importance of Compliance:
Failure to comply with eTIMS regulations can have significant repercussions for businesses. Non-compliance may result in penalties levied by the Commissioner, equivalent to twice the tax due. Moreover, businesses risk disallowance of expenses not supported by eTIMS-generated invoices, as per the amendments to the Income Tax Act. This underscores the importance of reviewing supplier compliance and ensuring adherence to eTIMS regulations.
Conclusion:
In conclusion, TIMS and eTIMS Solutions represent significant advancements in tax compliance technology, offering businesses greater convenience, flexibility, and transparency. By embracing these solutions, businesses can navigate the complexities of tax compliance with confidence, ensuring seamless operations and mitigating the risk of penalties. With the deadline for compliance fast approaching on March 31st, now is the time for businesses to act and ensure readiness for the future of tax invoicing in Kenya.
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