KRA Finds New Tactics to Nab Suppliers After eTIMS Flop
Following the difficulties encountered with the Electronic Tax Invoice Management System (eTIMS), the Kenya Revenue Authority (KRA) has declared a strategic change in its approach to tax compliance among suppliers. eTIMS was first introduced to improve transparency and expedite tax collection, however a number of operational issues limited its usefulness. In response, the KRA is currently using cutting-edge techniques to guarantee adherence and prevent tax evasion. Take a look at the KRA’s latest strategies and how they affect Kenya’s tax system and suppliers.
eTIMS difficulties
By digitizing the invoicing process and facilitating the KRA’s ability to follow transactions in real-time, the eTIMS was designed to transform tax collection. But the system encountered many obstacles:
Technical Difficulties: A lot of suppliers complained about regular technical problems that made it difficult for them to send electronic invoices, which frustrated them and reduced compliance.
User Resistance: Some companies found it difficult to adjust to the new system, which led to resistance from suppliers who favored more conventional invoicing techniques.
Limited Training and Support: Many suppliers were ill-prepared to use the eTIMS platform due to inadequate training.
The KRA realized that additional approaches were required to guarantee tax compliance as a result of these difficulties.
Novel Strategies to Guarantee Adherence
The KRA is employing a number of novel strategies to detect and apprehend non-compliant vendors in light of the eTIMS issues:
Improved Data Analytics: To better track supplier transactions, the KRA is spending money on cutting-edge data analytics tools. The authority can find possible tax evaders by looking at disparities in claimed incomes and purchasing patterns.
Cooperation with other Institutions: In order to obtain transaction data, the KRA is collaborating closely with banks and other institutions. Better tracking of suppliers’ financial activity is made possible by this partnership, guaranteeing that all revenue is recorded and taxed appropriately.
More Audits and Inspections: The authority intends to intensify its efforts in this area. Suppliers having a history of non-compliance or notable disparities in reported income will be the subject of sporadic audits to ensure compliance.
Campaigns for Public Awareness: The KRA is starting public awareness programs to inform suppliers of the value of tax compliance and the advantages of conducting business in accordance with the law in order to promote compliance. The goal of this program is to encourage organizations to adopt a compliance culture.
Consequences for Vendors
Suppliers doing business in Kenya will be significantly impacted by the KRA’s enhanced emphasis on compliance:
More Scrutiny: Suppliers should anticipate that their financial transactions will be subject to more scrutiny. Penalties and legal ramifications could befall those who neglect to keep correct records and adhere to tax laws.
Need for Adaptation: Companies must enhance their internal accounting procedures and make sure that all transactions are accurately recorded in order to comply with the KRA’s new tactics.
Possibility of Higher Costs: Compliance requirements can include more personnel training and technological investments, which could raise operating expenses for certain suppliers.
Long-Term Tax Compliance Objectives
The KRA’s new strategies are intended to strengthen Kenya’s tax compliance environment. The authority intends to accomplish a number of long-term objectives by strengthening oversight and using technology:
Increase Tax income: It is anticipated that better supplier compliance would result in higher tax income, which can then be used to fund infrastructure and public services.
Encourage Fair Competition: The KRA seeks to level the playing field by requiring all providers to adhere to the same compliance requirements, preventing law-abiding companies from being unfairly competed with by tax evaders.
Foster Public faith: By fostering public faith in the government, an effective and transparent tax collecting system can motivate more companies to voluntarily comply.
In conclusion
An important change in Kenya’s tax compliance environment is the KRA’s change in approach in response to the eTIMS’s difficulties. The authority hopes to improve supplier compliance and reduce tax evasion by utilising technology and creative strategies. Although suppliers may face difficulties as a result of these changes, the end goal is to establish a more equitable and sustainable tax structure that benefits all Kenyans. The KRA’s emphasis on accountability and openness will be essential in developing a compliance culture across the business community as it continues to hone its strategy.