April 2024

Tax Alert
The Tax Procedures (Electronic Tax Invoice) Regulations, 2024

Introduction
On 25 March 2024, the Cabinet Secretary for the National Treasury and Economic Planning (CS)
published the Tax Procedures (Electronic Tax Invoice) Regulations, 2024 (“The Regulations”) through
the Legal Notice (“LN”) 64 of 2024, that revoked the earlier similar regulations. These regulations
are issued pursuant to Section 23A of the Tax Procedures Act, 2015 (“TPA”) that provides for the
implementation of an electronic tax invoice management system (eTIMS).
The Finance Act, 2023, amended the TPA to require persons carrying on business in Kenya,
irrespective of their Value Added Tax (“VAT”) registration status, to issue electronic tax invoices and
maintain a record of stocks, where applicable, via the eTIMS. See our earlier alert on eTIMS here.
We provide below our analysis of the key regulations contained in the Tax Procedures (Electronic Tax
Invoice Regulations) 2024:

www.pwc.com/ke
Regulations Key Provisions Our Comments

Citations and “system” means an electronic tax invoicing or receipting The system referred to in The Regulations could mean an
interpretations system that is maintained and used in accordance with eTIMS software solution such as an eTIMS Client Software
these Regulations. (for Windows, Android Tablet and Personal Digital
Assistant - PDA), an eTIMS Mobile Application, online
eTIMS, eTIMS system to system integration via Online or
Virtual Sales Control Unit (OSCU/VSCU), or any other third
party system approved by the Kenya Revenue Authority
(“KRA”).
Who is required to comply The Regulations apply to any person carrying on Any person doing business in Kenya, i.e offering goods or
with these Regulations? business in Kenya and is not exempted in accordance services for a return, (unless exempted as highlighted in
with Section 23A of the TPA. the sections below) should comply with these Regulations.
Taxpayers who are not exempted may also apply to the
Commissioner who may exempt them via a Gazette
notice.
Use of the system - In addition to recording sales and generating invoices The Regulation aligns to the historical requirements in
Requirement to maintain through the system, The Regulations now require relation to issuance of electronic tax invoices save for
records of stock taxpayers to maintain records of stock in and stock out the fact that the issuer (user) is required to maintain
in the system. records of stock in the system unless exempted by the
Commissioner.
The stock records should include all local purchases and
imports. In the event of closure of business, the user of It is not clear whether the taxpayers will receive express
the system should notify the Commissioner in writing communication from the Commissioner on the exemption
(within 30 days before closure of business) indicating or this will be automatic.
records of current stock and account for all taxes under
the applicable tax laws.
Although the following categories of persons are
required to use an electronic tax invoicing system, the
Commissioner may require them to use a system that
does not maintain a record of stocks:
● persons in the service sector;
● persons not registered for VAT and with annual
turnover below twenty-five million shillings using a
simplified system prescribed by the Commissioner;
and
● any other person using a system prescribed by the
Commissioner.
System breakdown/ Taxpayers are expected to use the system at all It is expected that the Commissioner’s response will be
challenges times and in the event of any challenges, notify prompt to allow taxpayers to keep records in a prescribed
the Commissioner in writing within 24 hours of the form which will lead to no loss of data.
breakdown. The Commissioner may provide an
alternative method to record the sales and the taxpayer
is required to transfer these sales into the system once
the system is back in use.

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Regulations Key Provisions Our Comments

Requirements of tax Each electronic tax invoice generated from a system This Regulation has maintained the same requirements for
invoices, credit notes and shall contain — a tax invoice, credit note and debit note, with the previous
debit notes ● the Personal Identification Number (“PIN”) of the reference to a “register” being replaced with reference to
registered user of the system; the “system”.
● the time and date of issuance of the invoice;
● the serial number of the invoice;
● where the buyer intends to claim the expense or the
input tax, the buyer’s PIN ;
● the total gross amount;
● the total tax amount where applicable;
● the item code of supplies as provided by the
commissioner;
● a brief description of the goods and services;
● the quantity of supply;
● the unit of measure;
● the applicable tax rate;
● the unique system identifier;
● the unique invoice identifier;
● a quick response code; and
● any other information as may be specified by the
Commissioner.
The debit notes and credit notes are required to make
reference to the original invoice number to which the
supply relates to.
System specifications The electronic tax invoicing or recepting system is To be able to perform all these activities, the system is
required to have the capability to record and store the expected to be internet enabled to allow transmission of
prescribed information and a log of activities carried out invoice details to the Commissioner.
on the system, display message in English or Kiswahili,
As such, there are questions of its applicability given that
integrate and transmit data to the KRA system, allow
a majority of small businesses may not have the financing
adjustments to be made to it and maintain security and
and internet coverage to comply with these regulations.
authentication for authorized users.
Transactions excluded In addition to the exclusions listed in Section 23A of An expansion of the transactions that are excluded
from electronic tax the TPA, i.e., emoluments that have been subjected to from the eTIMS requirement is a welcome move for
invoicing requirement employment tax, imports, investment allowances (capital businesses. We hope that future adjustments will consider
deductions on assets), airline passenger ticketing and clear guidance for micro, small and medium enterprises
interest, The Regulations also exempt the following from (MSME’s).
eTIMS requirements:
There is also certain clarity required on items such as
● fees charged by financial institutions; internal accounting adjustments to avoid abuse or future
● expenses subject to withholding tax that is a final tax; misinterpretations.
● services provided by a non-resident person without a
permanent establishment in Kenya;
● internal accounting adjustments; and
● any other exclusion as may be provided under
Section 23A of the Act.
Room for exemptions The Commissioner is allowed to exempt a person from It is expected that the Commissioner will publish a list of
the requirements to issue electronic tax invoice through recommended payment platforms and guidelines on how
a Gazette notice. Further, the Commissioner may also the information will be transmitted to the KRA’s system.
exempt a person from e-invoicing requirements where;
the business income in relation to a transaction is
received through a payment platform recommended by
the Commissioner; and the information is transmitted to
the Authority’s system.
Offenses and penalties If a person does not comply with these Regulations, It is unclear how the “tax due” as referred to in The
or interferes with the proper functioning of the system Regulations shall be calculated considering that the
including uninstallation and changes of the device transactions involved covers both income tax as well as
without notifying the Commissioner, the person commits VAT. There are also certain transactions that are zero rated
an offense and shall be liable to a penalty of two times for VAT purposes or exempted from tax hence there will be
the tax due as specified under Section 86 of the TPA. no taxable income.

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 Conclusion
The publication of these Regulations sheds more light on the use of eTIMS and addresses some of the concerns
that taxpayers had following the mandatory requirement to implement electronic invoicing from 1 September
2023. In as much as the adoption of eTIMS is expected to have benefits such as efficiency, and increased
tax compliance, certain challenges that could impact the adoption need to be identified and addressed
expeditiously. These may include poor internet connectivity, knowledge gap on the tax laws and the usage of the
platform, nature of data, among others. Active engagement by stakeholders is therefore necessary to enable the
legislators and the regulators to continually improve the user experience and efficiency.

Contacts
Please feel free to contact your usual PwC contact or any of the team
below should you wish to discuss this or any other matter.

Joseph Khaemba Daniel Muia Christine Mukami

Associate Director Manager Associate
joseph.khaemba@pwc.com daniel.m.muia@pwc.com christine.mukami@pwc.com
+254 20 285 5000 +254 020 285 5890 +254 20 285 5000

Please note that this tax alert does not constitute tax or legal advice.
The alert has been prepared using resources and documents immediately available to the preparer and
which may not constitute the final documents. No decision should be made on the basis of this alert.
Please consult your regular advisor should you require any advice.

This publication has been prepared as general information on matters of interest only, and does not constitute professional advice. You should
not act upon the information contained in this publication without obtaining specific professional advice.
© 2024 PricewaterhouseCoopers Limited. All rights reserved. In this document, “PwC” refers to PricewaterhouseCoopers Limited which is a
member firm of PricewaterhouseCoopers International Limited, each member firm of which is a separate legal entity.
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