Recently there was a short video clip, doing the usual social media rounds, of a lady who had come to a complete standstill on the last kilometre or so of the Elephant Hill hiking trail in the Aberdare Ranges. The hiker was morose, crying tears and begging to “just go home”. The person filming the video was cajoling, pushing and encouraging her using a mixture of raw humor and steely determination. “Hata ambulance inalia ikienda” was his edgy reaction to her tears, “Ushawahi ona ambulance inalia ikisimama?” The next scene shows the lady at the 12,000 feet above sea level summit of Elephant Hill, laughing hysterically in mixed relief and pride at achieving that Herculean task of climbing that Aberdare mountain-that-is-grossly- misleadingly-named-a-hill.

I have attempted Elephant Hill twice, the first time I only got halfway before collapsing in a heap at Desperado Point. I managed to summit on the second attempt, four years later having cursed, sworn like a sailor and grumbled my way to the top.  Listening to business owner’s experiences in becoming compliant with Kenya Revenue Authority’s (KRA) E-Tims invoicing system reminded me of the painful experience of climbing Elephant Hill. KRA with one stroke of brilliance, has ensured that business owners have become its unwitting agents of tax compliance change.

With effect from January 1^st 2024, any expense that a business owner could claim as tax-deductible against their income would have to be accompanied by an E-Tims invoice. That meant that all suppliers whether they were providing goods or services of whatever amounts, would have to send in their invoice from the E-Tims system. The system captures the tax personal identification number (PIN) of the supplier and the buyer of the goods or services so that KRA is able to track sales and payments on both sides of every single transaction happening. Failure to do so means that the business owner who is tax compliant registers revenues on the KRA system, but is unable to demonstrate tax compliant expenses. Consequently, the business owner would have to pay full income tax on those revenues despite having legitimate tax-deductible business-related expenses.

A friend who is in the property management business was giving me his experience of trying to get their informal suppliers such as plumbers and painters to start providing E-Tims invoices. To begin with, these fundis were completely belligerent in their resistance. Why were they being asked to register with KRA and send formal invoices? They had hitherto operated below the radar, sending hand written invoices when their work was complete. They were blissfully outside of the tax collection net. But for the property management company, it was a non-negotiable process change: send E-Tims invoices or stop supplying services. Most of their fundis complied. Some didn’t. Needless to say, the resisters returned with their tail between their legs a few months into their self-imposed drought of no revenues, hunger forcing them into tax compliance.

For my own business, I had to take the same drastic action with a supplier who categorically refused to send us an E-Tims invoice for goods purchased from her. As we had already consumed the items, we had to take the painful hit to our bottom line in terms of not being able to claim the expense as tax deductible. But I had had an epiphany by this time. How was it that we were constantly ensuring that we were paying taxes, which taxes were being used by the government to provide services to its citizens, and there were other people enjoying the same services but not paying taxes?

How is it that we were keeping meticulous records of revenues and expenses, filing VAT returns monthly, filing KRA income tax returns annually, responding to stroke-inducing KRA queries when necessary and there were others operating blissfully under the radar of the same sunrays that the tax collector shone upon us? No, we could not continue doing business with this supplier and purport to be both enjoying taxpayer generated government services in the same country.

According to KRA the domestic tax collections between July and November 2024 grew by 3.5% from 621.9 billion to 643.7billion. This is a small movement in the domestic tax collections needle. I reckon that once business owners file 2024 financial returns and get the shocking wakeup call on how many expenses are not tax deductible, attitudes will change on how we demand E-Tims invoices from our suppliers. Paying even more taxes to KRA is not a hill any business owner wants to die on.

X: @carolmusyoka

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