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| Traders in a market |
The Kenya National Chamber of Commerce and Industry (KNCCI) has expressed strong opposition to the proposed imposition of a KSh 2 million penalty for non-compliance with the Electronic Tax Invoice Management System (eTIMS). Small business traders in the market. The Finance Bill 2024 proposes a KSh 2 million fine on small businesses for non-compliance with eTIMS. KNCCI argued that the penalty that has been proposed in the Finance Bill 2024 is punitive and will have severe repercussions on Micro, Small, and Medium Enterprises (MSMEs). KNCCI opposes eTIMS non-compliance fine In a statement released on May 20, KNCCI, which represents the private sector, acknowledged the government’s efforts to streamline tax collection and enhance compliance through the adoption of eTIMS. “While we recognise the government’s efforts to streamline tax collection and enhance compliance through the adoption of eTIMS, we believe that the proposed penalty is punitive and will have severe repercussions on Micro, Small, and Medium Enterprises (MSMEs). MSMEs are the backbone of our economy, contributing about 40% of GDP and employing more than 80% of Kenyans,” said KNCCI in a press release signed by Erick Rutto. Why KNCCI is against proposed penalty The chamber highlighted the results of their Quarterly Business Barometer Survey for Q2/2024, which revealed that over half of the respondents were businesses with annual revenues below KSh 1 million and operate in the informal sector. “In the KNCCI Quarterly Business Barometer Survey for Q2/2024, more than half of the respondents were businesses that have less than Ksh. 1 million in annual revenue, reflecting Kenya’s economy. Placing a penalty of Ksh 2 million a month on businesses that make less than half of that in a year will lead to closures and job losses,” read the statement by KNCC1. The chamber advocates for a more phased approach to implementing eTIMS, which would allow businesses time to adapt without the immediate threat of severe penalties. They suggested a grace period or a tiered penalty system, where initial non-compliance results in warnings or smaller fines, escalating only if non-compliance persists. The announcement by KNCCI comes after Edible Oil Manufacturers also termed a proposed 25% excise duty on vegetable oil an economic miscalculation.
by Elijah Ntongai