On September 25th, 2020, the Cabinet Secretary of National Treasury and Planning gazetted the Value Added Tax (Electronic Tax Invoices) Regulations, 2020 which were enacted in order to ensure that the Kenya Revenue Authority monitors the daily supply of goods and services for purposes of taxation. These Regulations apply to persons registered for VAT under the VAT Act.
The Regulations introduced the use of the register in order to minimize VAT fraud by ensuring that VAT is accurately accounted for. It is also expected that there will be a general ripple effect thereby increasing tax revenue since VAT is one of the critical areas where tax revenue has been seen to grow rapidly.
The regulations require that every VAT registered person/entity under Section 34 of the Value Added Tax Act No. 35 of 2013 to have a register. The user’s responsibilities include ensuring availability of the register at the point of sale, facilitating inspection of the register by an authorized officer as well as ensuring that the register is regularly serviced for proper functioning.
The roll out of the Electronic Tax Invoice has been extended to commence on 1st August 2021 vide a public notice dated 9th July 2021. All VAT registered persons are therefore required to comply with the requirements of the Regulations on implementation of the Electronic Tax Invoice within a period of twelve (12) months from the date of the roll out.
KRA has further urged parties who cannot comply with the same within the provided timelines to apply for an extension of time for a period not exceeding six months. However, the said extension of time ought to be made at least thirty (30) days before the expiry of the twelve- month period.
For further information regarding Value Added Tax and professional advice thereto, kindly do not hesitate to contact us at [email protected] or visiting our offices on 8th Floor, CMS Africa House, Nairobi or on 3rd Floor, Ritah Plaza, in Kakamega.