The eTIMS works by linking businesses’ sales systems to the KRA database. This allows the KRA to track all transactions and ensure that the correct amount of VAT is being paid by each business. The system is also able to detect any anomalies or inconsistencies in transactions, which can trigger an investigation by the KRA.KRA eTIMS (stands for Kenya Revenue Authority Electronic Tax Invoice Monitoring System) is a digital platform developed by the Kenya Revenue Authority (KRA) to facilitate taxpayer identification, registration, and management of tax-related activities. It is an improvement on the previous Tax Invoice Management System (TIMS), which was deemed ineffective in curbing tax evasion and fraud.
The KRA eTIMS system was developed to improve the efficiency of tax administration in Kenya, reduce the time and costs associated with tax compliance, and increase revenue collection. The system provides a secure online portal where taxpayers can register and update their personal and business information, file their tax returns, make payments, and access other tax-related services.
How it works:
KRA eTIMS works by providing a secure online platform where businesses can issue, transmit, and validate electronic tax invoices and receipts. It uses an electronic signature and encryption technology to ensure the authenticity and integrity of the invoices and receipts.
To use the eTIMS platform, businesses must first register with the KRA and obtain an Electronic Signature Certificate (ESC). The ESC is a unique digital certificate that identifies the business and allows it to access the eTIMS platform.
Taxpayers must first register for an account and obtain a KRA PIN (Personal Identification Number). They must also ensure that their sales systems are integrated with the eTIMS platform. Once the systems are integrated, all transactions are automatically recorded and transmitted to the KRA in real-time. Businesses are also required to issue electronic tax invoices to their customers using the eTIMS platform.
Once registered, the business can then issue electronic tax invoices and receipts to its customers. The invoices and receipts are automatically uploaded to the eTIMS platform, where they are stored securely and can be accessed by the KRA for audit purposes.
Taxpayers can log in to the eTIMS portal and access a range of tax-related services, including filing returns, making payments, and accessing tax compliance certificates.
Why it replaced TIMS:
KRA eTIMS replaced the old Tax Invoice Management System (TIMS) because the old system was outdated and could not keep up with the changing needs of businesses and the KRA. TIMS was limited in functionality and did not have the security features necessary to protect against tax fraud and evasion.
The new eTIMS system is more advanced and user-friendly, with enhanced security features that make it more effective in combating tax evasion. It also allows for real-time data processing and faster tax returns processing, which helps to improve tax compliance and revenue collection. Overall, KRA eTIMS is a significant improvement over the old system, and it has helped to modernize tax administration in Kenya.
One of the key benefits of the KRA eTIMS system is that it provides real-time access to taxpayer information, which enables KRA officials to monitor compliance and detect potential tax fraud or evasion. This helps to improve tax administration and increase revenue collection for the government.
Another benefit of eTIMS is that it allows businesses to access their tax records online, providing real-time visibility into their tax position. This makes it easier for businesses to plan and manage their tax liabilities, ensuring that they are always in compliance with KRA regulations.
eTIMS also has a number of other features, including online payment of taxes, online registration for new taxpayers, and an electronic audit trail that makes it easier for KRA to monitor and enforce compliance.
The eTIMS system is considered more efficient and effective than its predecessor, TIMS, because it eliminates the need for manual verification of invoices and reduces the risk of fraudulent activities. The system also provides businesses with a more convenient way of filing their VAT returns and reduces the amount of paperwork involved.
Overall, the eTIMS system is an important tool for the KRA in its efforts to improve tax compliance and increase revenue collection. By ensuring that all transactions subject to VAT are accurately monitored and recorded, the KRA can identify and address any tax evasion or fraud, while also providing businesses with a more streamlined and efficient tax system.