Introduction
The Finance Act 2023 introduced eTIMS as a technologically advanced software solution designed to facilitate tax compliance for businesses. This system is linked to software that is at the point of sale/billing system.
This is accessible through various electronic devices, such as laptops and a smart phone which enhances its accessibility and flexibility.
Eligibility
Following the KRA public notice issued on 7th November 2023 on on-boarding non-VAT taxpayers, the primary eligibility criterion for using eTIMS is that it applies to all individuals or entities engaged in business activities, including those that are not registered for VAT.
Non-Deductable Expense
One crucial aspect of eTIMS adoption is the requirement that all business expenditures must be supported by an eTIMS-generated tax invoice with effect from 1st January 2024.
Any business expense that lacks this essential documentation will not be considered deductible for tax purposes.
Cost of eTIMS
The eTIMS software is provided at no cost at any KRA offices and if the gadget is compatible with the software.
In cases where the gadget is not compatible with the software, the taxpayers are advised to purchase from a local vendor of the software at a cost.
Deductable of eTIMS costs as an Expense
The cost of an eTIMS is not a claimable expense where it was installed in any KRA office. This is because it is offered to taxpayers at no cost.
However, where the vendor is engaged in installing at a cost, the expense will be claimable if its supported or if it’s an eTIMS invoice.
Effective Date
Starting from January 1, 2024, the use of eTIMS will be mandatory for all taxpayers in business.