- The Kenyan government has developed a new way to effectively combat the issue of tax evasion, through the use of technology.
Kenya-Taxation with the Electronic Tax Register (ETR) in place, has seen the government effectively streamline the collection of Value Added Tax (VAT) while also giving Kenyans a medium to report cases of tax evasion from merchandise bought.
The issue of tax evasion is getting out of hand as the Kenya Revenue Authority revealed that the amount of revenue lost to the “Missing Trader Scheme”, as it is popularly known, is up to Kshs.30 billion.
KRA’s findings show that since 2015, fake invoices worth Kshs.65 billion have been issued, and it got even worse in 2016 when Kshs.32 billion worth of fake invoices were generated.
Kenya-Tax Taxation: What is ETR?
According to KRA, Electronic Tax Register (ETR) is a cash register financial memory that keeps track of every transaction for the trader accounting for VAT levied at the time of making a sale.
Kenya-Taxation: How to tell if a purchased good is tax compliant
To help make this happen, the ETR generates an Electronic Tax Invoice which comes with a QR code that helps a customer establish the validity of the invoices/receipts issued by the trader.
This helps the customer confirm that the VAT on the purchased product gas has been remitted to the Kenyan Reserve Authority (KRA). By doing this, the customer has been able to prevent tax evasion.
According to the KRA, traders have till August to comply with the ETR as the government has provided a full list of 16 approved ETR suppliers and manufacturers. This is to ensure smooth compliance and help traders adopt this initiative on time.
In September 2020, Ukur Yatani, Treasury Cabinet Secretary announced the VAT Electronic Tax Invoice Regulations that introduced the implementation of the Electronic Tax Invoice.
In June 2021, the KRA flagged a post on social media that said “In a public notice dated 22/06/2021, KRA informed all authorized Manufacturers and Suppliers of fiscal ETR devices to ensure all ETR devices can automatically send all sales information into the KRA tax system.
“The roll-out will enable an automated population to the taxpayers’ VAT returns hence reducing filing errors, save time and complexity, making it easier for business people to file their own tax returns,” the false statement read in part.
As part of the fight against economic crime in Kenya, the EACC invented a platform with a web-based reporting system known as the Business Keeper Monitoring System (BKMS) that ensures safe and anonymous reporting.
According to EACC, the reporting system hides the whistleblower’s identity and their report confidential.
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