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Issues With KRA’s New Tax Order, eTIMS - Money Weekly
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Issues With KRA’s New Tax Order, eTIMS - Money Weekly


It is that time of the week again when we look at the news headlines over the last seven days and dissect those that can affect your money. 

Welcome to yet another edition of Money Weekly.

This week:

  • Kenya Revenue Authority (KRA) maintains that the deadline for electronic Tax Invoice Management System (eTIMS) registration remains at the end of March, despite pushback from farmers and other small business traders.
  • According to research conducted by The Star, it takes a fresh graduate 98 job applications to land an interview.
  • As soon as President Ruto signed the new Affordable Housing Bill, a petition was filed at the High Court in Nakuru to bar the commencement of the levy deductions.
  • Kenyan content creators will monetise their content on Facebook and Instagram starting June this year.
  • A survey by Tala sheds light on the nature of the difficult economic conditions Kenyans are grappling with.

For this and much more. Let’s dive in.

Kenya’s Transition to eTIMS to Continue Despite Pushback

Late last month, a video of Murang’a avocado farmers chasing away KRA officers made the rounds on the internet. The avocado farmers were objecting to the new KRA eTIMS system, which they were being trained on. The system is supposed to be used by small business traders to generate electronic invoices. This is how the KRA plans to bring informal business people into the tax net.

Read Also: When are Sacco Loans Better Than Bank Loans?

The electronic Tax Invoice Management System (eTIMS)

The KRA has been onboarding businesses on the electronic Tax Invoice Management System (eTIMS) since November last year. Initially, farmers and small traders earning below Ksh5 million in turnover a year were exempt from the system.

However, KRA has since developed eTIMS Lite. A simpler version of the invoice system. With this new solution, KRA now requires anyone conducting business in the country to be registered. 

According to KRA, these initiatives are meant to streamline tax reporting and enhance compliance. 

eTIMS Objections

Nonetheless, farmers are among the groups adversely affected by this new requirement. Some farmers are not very familiar with such digital solutions, posing a big learning curve. Others reside in areas where the internet is unreliable, posing challenges during transactions.

Others who have objected to eTIMS onboarding are doctors running private practices. They claim that generating invoices using the new system risks violating patient doctor confidentiality.

eTIMS Registration Deadline

Despite the objections, KRA has set the end of March as the deadline for onboarding existing businesses. New businesses after March will be onboarded upon inception.

eTIMS Breakdown

Kenyans have also been raising issues they are experiencing with the system. To address these issues, KRA issued a press statement to clarify the following issues.

  1. Information confidentiality: The invoice only captures transaction details, as in any other invoice/receipt.
  2. Invoices as evidence of income: Invoices are evidence of business transactions. Tax is only charged on income and not on the value of the transaction.
  3. eTIMS solutions: KRA has created solutions to help various businesses onboard the eTIMS system.some text
    1. eTIMS Lite - available for non-VAT registered taxpayers. This is accessible through the eCitizen portal and USSD *222#. It is usable for traders with minimal transactions.
    2. eTIMS online portal - Exclusive to taxpayers in the service sector. Accessible through the web browser.
    3. eTIMS client - This is software suitable for taxpayers dealing in goods, or both goods and services. Can be used with multiple branches and paypoints. some text
      1. eTIMS Windows paypoint - suitable for single location with single paypoint
      2. eTIMS Windows multipaypoint - suitable for multiple locations and/or multiple paypoints
      3. eTIMS Android - suitable for taxpayers with minimal transactions. Accessible through smartphones, tablets, and PDA devices.
  4. eTIMS system-to-system integrations - This system allows the integration of a business's current invoicing system with eTIMS instead of a separate invoicing system. It comes in two packages.some text
    1. Virtual Sales Control Unit (VSCU) - Caters to taxpayers with extensive transitions and bulk invoicing.
    2. Online Sales Control Unit (OSCU) - Suitable for taxpayers using an online invoicing system

Despair For Kenyan Graduates Seeking Jobs

The distance between a fresh graduate and their first job interview is 98 applications. This is according to a spot check The Star conducted on Kenyan graduates.

The study reveals that it costs a graduate Ksh6,000 to obtain all documents asked for during job applications, including good conduct, a Higher Education Loans Board clearance certificate, a national health cover card, a national social security fund card, and credit bureau clearance, among others.

To address employment challenges, experts earlier in the week convened at the Future of Work Summit in Nairobi. 

From the summit, the following emerged:

  • Existing jobs require reskilling and upskilling to remain relevant 
  • Employers are looking for workers offering diverse skills
  • Employees to consider building cross-cutting and transversal skills
  • Soft skills are necessary for future of work
  • Machines are continuously taking over human talent jobs with automation,robotics, algorithms and artificial intelligence at the forefront
  • Remote work, ecommerce and online learning are crucial for future of work
  • Currently, 2.4 million Kenyans are working online

All that notwithstanding, according to the latest data from Clock by the World Data Lab and the Mastercard Foundation, Kenya is leading its African counterparts, Rwanda, Ghana, Nigeria, Uganda, and Ethiopia, with the lowest unemployment rate. Kenya's Youth Not in Education, Employment, or Training (NEET) stands at 15%, while the African average stands at 25%.

Read Also: Treasury CS Hints at Another Spike in Taxes - Money Weekly

Ruto’s Affordable Housing Faces New Court Hurdle

On Tuesday, President William Ruto signed into law the Affordable Housing Bill, 2023. After his signature, Kenyans will now be deducted the 1.5% housing levy starting in March 2024. Employers will also need to match the 1.5% deduction.

The deductions will include all salaried and non-salaried employees and those working in the informal sector. The singling out of only salaried Kenyans is part of what led to the levy to be declared unconstitutional by the court last year on discrimination grounds.

However, as soon as the president assented to the bilkl, a doctor in Nakuru, Magare Gikenyi, moved to the High Court, seeking orders to temporarily suspend the commencement of the levy deductions.

Here are his reasons;

  • The levy overlooks Kenyans who already own homes, land to build or are servicing mortgages
  • The levy tries to introduce “communist ideologies.”
  • The project plans to use public land to build the houses and sell to private individuals, which he says is unconstitutional.
  • The legal framework within which the levy has been established is faulty.
  • There are no guarantees to contributors 
  • Low penalties in case of misappropriation

Read More: Housing Levy Deductions Resume Today as Ruto Signs Law

Kenyan Digital Creators to Monetise Content on Facebook

According to a recent announcement by the president, William Ruto, and Meta, the parent company of Facebook and Instagram, Kenyan content creators will be eligible to monetise their content starting in June this year.

Speaking during the announcement, the president urged the Meta officials to expedite the process, urging for commencement earlier than June.

Kenya joins South Africa and Egypt to make it the third country in Africa where creators can earn from Facebook. Numbers from industry insiders show that Facebook’s cost per mille (CPM) ranges anywhere from $8 (Ksh1,064) to $20 (Ksh2,660). For African countries, it ranges between $8 (Ksh1,064) and $10 (Ksh1,330).

But before one earns from Facebook, one has to meet the following eligibility criteria.

  • Have more than 5,000 followers
  • Be 18 years and older
  • Have more than 5 active videos on your page
  • Have 60,000 minute views in the last 30 days

Read Also: Facebook Monetisation Finally Coming to Kenya: How it Works

Kenyans Experiencing the Gripping Economic Bite

A survey conducted by digital lender,Tala, paints the picture of Kenyans struggling under tough economic conditions.

  • 33% of Kenyans surveyed would exhaust their savings within a month of losing regular income.
  • 13% of respondents would deplete their savings within a week
  • 43% would last between a month and six months.
  • 75% of Kenyans are optimistic about their financial situation improving in the next six months.
  • 70% of respondents reported no improvement in their financial situation

Read Also: 5 Effects of the Kenya Shilling Strengthening Against the US Dollar

Other Major Stories

New Rules For Better Power Service Delivery

The Energy and Petroleum Regulatory Authority (Epra) is putting pressure on Kenya Power to modernise its outdated infrastructure and increase the effectiveness of reconnecting during outages. 

Epra intends to restrict the number of unplanned blackouts per customer to 20 per year, the total cumulative duration of outages to 80 hours annually and a maximum outage duration of four hours. 

These rules are intended to enhance the provision of services, and noncompliance may result in penalties. 

The rules also apply to recently established distributors. Kenya Power has a dismal history, with an average of 44.9 unexpected outages per year that inconvenience customers and disrupt companies. 

Regulations pertaining to compensation for power outages are still pending, despite the fact that demands for such compensation are increasing.

CBK Resists 17% Bid On Treasury Bills

The Central Bank of Kenya has resisted investors' pressure to pay 17% interest on Treasury bills. Last month, CBK collected Ksh275 billion from bond sales, which gives the government some leverage.

Investor demands averaged 17.01% on the 364-day Treasury bill but CBK kept the rate at 16.98%. However, there are lingering concerns about the government's fiscal health, especially since the KRA has been missing its collection targets.

On the other hand, yields on local bonds hit record highs, raising concerns among money market experts about the potential devaluation and loss of bondholders' wealth. Rates on bonds average 18%, while Treasury bills stand at 16.6%, worrying analysts.

Read Also: Kenya on Wash Wash Grey List: What it Means For You

Investors Eye Higher Dividends

The Nairobi Securities Exchange is experiencing a surge as investors are buying into tier-one bank stocks. Banks have been announcing their dividends over the past week, with some announcing decent dividends. 

The move by investors has seen NSE’s value grow by Ksh12.1 billion.

  • Stanbic Holdings will be giving a dividend of Ksh15.35 per share
  • Standard Chartered Bank Kenya will be paying Ksh29 per share

Additionally, the company's biggest telco, Safaricom, saw its share price go up ahead of its closing books on an interim dividend of Ksh0.55 per share. 

Moreover, seven out of the nine big banks on the NSE have seen their prices go up.

Hospitals Turn Away NHIF Card Holders

Private hospitals have started turning away patients using the National Health Insurance Fund (NHIF) over the insurer’s failure to pay the hospitals. 

Hospitals from the Kenya Healthcare Federation (KHF), the Rural Private Hospitals Association of Kenya (Rupha) and the Kenya Association of Private Hospitals (KAPH) now require all patients to pay in cash, including NHIF card holders. 

The demand to pay in cash cuts across inpatient services, outpatient services, and even specialised services such as cancer treatment, dialysis, and eyecare.

KRA to Collect Ksh1.1 Trillion in Four Months

Kenya Revenue Authority (KRA) has a target of collecting Ksh2.5 trillion by the end of the 2023/24 financial year. However, they have collected Ksh1.37 trillion in the eight months ending in February. This leaves the taxman with the burden of collecting Ksh1.1 trillion in the next four months, translating to Ksh280 billion monthly.

Over the last eight months, KRA has been collecting an average of Ksh171.7 billion per month. 

Despite the introduction of new taxes and the tightening of enforcement measures, KRA will still not meet its target. This pushes the Treasury to rely on debt to keep the government going. Year to date, the Treasury has borrowed over Ksh1 trillion both domestically and externally.

Read Also: All About Salary Advance Loans in Kenya

Other News in a Snapshot

EAC Vehicle Height Limit: Shippers are calling for a review of the East African Community's (EAC) rule on vehicle height. The EAC Vehicle Load Control Act, 2016, puts the maximum height of vehicles at 4.3 metres except for abnormal load. A majority of transporters using 40-foot cube containers have been flouting this rule since the higher containers carry much more goods. KeNHA has since suspended the implementation of this rule to allow for more consultation.

Surplus Trade With Africa: Kenya’s export goods value to other African countries grew by 22.99% to Ksh431.89 billion. The most in demand goods included clinkers, cement, lubricants,  food preparations, and wheat flour. The re-export of kerosene-type jet fuel contributed significantly. South Sudan, Somalia, Egypt, Tanzania, the Democratic Republic of Congo and Uganda were some of the high demand countries.

Kwal Stake Sale: The government intends to sell its 43.77% stake in Kwal Holdings East Africa Limited (KHEAL). The privatisation authority has invited bids for the government share, which was valued at Ksh4.1 billion in June 2022, according to the latest available information. KHEAL is the maker and distributor of Savanna and Yatta, Drostdy-Hof, Amarula, Viceroy, Hunter’s Choice and Kibao Vodka.

Bullish Shilling Cuts Remittances: Remittances from Kenyans abroad dropped in February compared to January, which experienced the highest inflows in years. Remittances in February amounted to $385.9 billion (Ksh52.2 billion), which was a 6.4% decline from the previous month. Experts postulate that it might be because the shilling gained value against the greenback, which disincentives Kenyans abroad from sending money home.

No Respite for Commuters: Commuters continue to pay exorbitant fares as Matatu operators fail to adjust the fares downward despite a constant drop in fuel prices since December. Fares remain high despite the latest fuel price review by the Energy and Petroleum Regulatory Authority (EPRA), which saw fuel prices drop below Ksh200 and the Kenyan Shilling making significant gains.

Read Also: The 5 Main Costs You Pay For Not Having Insurance

Kenya’s Coffee Exports Double: Coffee exports from Kenya nearly doubled to 2,685 metric tons in January due to high demand from 1,478.3 metric tons in December. Revenues earned in January rose by 72% to Ksh2.1 billion from Ksh1.2 billion in December. This is despite a drop in the price of Kenyan coffee from Ksh829,105 per tonne in December to Ksh786,402 per tonne in January.

Maize Production Boosted: Last year's March to May long rains and October to December short rains boosted maize production, which is expected at 4.2 million metric tons. This will be an improvement of about 20% compared to the five-year average. Despite this increase, Kenya remains a maize deficit country and will still need to import about 356,000 metric tonnes of maize.

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Stephen Kimani aka KIMSpeaks is a thought leader, speaker, and writer. He is also the Founder of Living the DREAM. He is passionate about learning and teaching ideas that empower people to improve the quality of their lives. You can connect with Kimani on LinkedIn.

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