Kenya has an opportunity to widen its tax base extensively, if the innovation of a new machine that enables automatic reporting of taxes by businesses to the Kenya Revenue Authority (KRA) by a local technology firm, is adopted.
The new model Electronic Tax Register (ETR) innovation by Dejavu Technologies Ltd, which transmits information such as sales businesses make, products sold and relevant payable tax to KRA real time, is a response to calls by KRA for businesses to adopt Tax Invoice Management System (Tims) as an advancement to the ETR system.
The company developed a prototype of the machine, which has passed several tests set by KRA after being submitted to the authority for tests on its efficacy, and now awaits licensing if it passes final test phases.
Among requirements set by KRA for new ETR machines needed to curb tax evasion in the country is a machine being able to capture details such as company name, location, contacts and pin number, as well as being able to transmit transactions automatically to the authority
“The ETR and cash register we have developed identifies not just the tax group but the specific tax item and synchronises the same to stock control in the same transaction. We fully support the TIMS project and have been in the frontline to implement the project as it is going enhance tax collection by the government through simplification of processes,” says Mr Thomas Maganjo, the company’s operations manager.
Government revenues
Dejavu Technologies is an indigenous technology firm started in 2008, which has been engaging in development of business solutions at Point of Sale (POS) , importation of POS and ETR equipment and software development,.
KRA’s intention has been to have a look at businesses operations in the country so as to know how and kind of sales they make in order to bring tax evaders inside the tax net and increase government revenues.
What is happening currently is that businesses generate invoices but the information is stored at ETR memories and cannot be transmitted to KRA as and when transactions happen, meaning that businesses have to compile invoices after a certain period and report to KRA the sales made. With this system, many rogue businesses have understated figures, leading to the rise of a tax evasion web.
“The new system KRA is proposing is a tax invoice management system, which is an upgrade of the other system KRA was using. With this system, it updates real time- once you punch in the amount, it’s able to verify the trader’s pin, if you want you can also have the customer’s details on your receipt. It prints out a QR code and you will be able to verify whether the trader you are buying from is registered and this becomes easier when filing returns because the details will be captured in the KRA servers,” said Mr Eric Gitau, Dejavu founder.
Apart from curbing tax evasion, the new system is also bound to ease processes of filing taxes for businesses since KRA will be having details of their tax payments on its servers. BY DAILY NATION