The Kenya National Chamber of Commerce and Industry (KNCCI) has expressed concerns regarding the proposed imposition of a Ksh.2 million penalty for non-compliance with the Electronic Tax Invoice Management System (eTIMS) outlined in the proposed Finance Bill 2024.
In a statement issued on Monday, KNCCI President Erick Rutto argued that the proposed penalty is punitive and would disproportionately impact Micro, Small, and Medium Enterprises (MSMEs).
Ruto emphasized that there has been a low adoption rate of the eTIMS system among MSMEs, which could hinder efforts to streamline tax collection and enforce compliance.
The chamber called for a reconsideration of the penalty, suggesting that more support and incentives should be provided to encourage MSMEs to adopt the eTIMS system voluntarily.
Additionally, KNCCI urged for more extensive sensitization and training programs to help MSMEs understand and effectively utilize the eTIMS system, thus promoting tax compliance while minimizing adverse impacts on businesses.
We believe that the MSMEs are the backbone of our economy, contributing about 40% of GDP and employing more than 80% of Kenyans. The majority of them operate in the informal economy and have neither clearly understood nor adopted eTIMS,” he said.
He added that the increment will lead to the loss of jobs and opportunities for many Kenyans.
KNCCI has therefore advised that before the unsavory penalties are implemented all MSMEs should be apprised of the processes of adopting the eTIMS system to allow an effective revenue collection structure.
“Many small business owners may not have the technical knowledge or resources to implement these systems effectively,” said Rutto.
“The government should invest in comprehensive capacity-building programs and provide dear, accessible information and training to ensure that MSMEs are well-equipped to comply with eTIMS.”
They want the government to prioritise capacity-building initiatives to ensure that MSMEs can effectively adopt and comply with eTIMS.
On March 26, the Kenya Revenue Authority (KRA) warned business owners who are yet to get on to the eTIMS platform that they will not be eligible for tax refunds if they do not onboard their services and also risk facing a penalty double the amount of taxes evaded.
