Treasury Cabinet Secretary Njuguna Ndungu on Thursday published the Tax Procedures (Electronic Tax Invoice) Regulations and the Income Tax (Turnover Tax) Regulations, 2023, aimed at businesses in the country.
The Kenya Revenue Authority (KRA) will be able to monitor businesses’ inventory under the new rules.
Notably, all businesses will be required to record all items sold, including whether the stock was purchased locally or imported.
“The taxpayer shall notify the Commissioner in writing within 30 days before the closure of business indicating records of current stock.
“In case there is transfer of stock upon closure of business, the taxpayer shall notify the Commissioner in writing the stock, quantity and their levels,” read the regulations in part.
Invoices, on the other hand, will be generated by the system.
Invoices must also include the registered system user’s KRA PIN, the time and date of issuance, and the invoice serial number.
The buyer’s KRA PIN or other identifying information, the total gross amount, and the total tax amount will also be shown.
“A person commits an offence if the person fails to comply with any provisions of these regulations or tampers, manipulates or interferes with the proper functioning of the system including uninstallation and change of the device without notifying the Commissioner,” read the regulations in part.
Businesses with an annual income of Ksh1 million to Ksh25 million will be subject to a 3% turnover tax under the new regulations.
Rental income, withholding tax as a final tax, and money generated from professional and training fees are all exempt from these provisions.
“Where the income from the business of a person registered under Regulation 7 exceeds Ksh25 million during a year of income, that person shall notify the Commissioner of the change of status,” read the proposals in part.
Late filing of tax returns results in a monthly penalty of Ksh1,000, while late payment of tax results in a penalty of 5% of the due tax.
Kenyans have been asked to submit their comments on the new regulations to KRA by December 8.
