“An accountant is someone who solves a problem you didn’t know you had in a way you don’t understand.” Anonymous

 

I found that quote apt as it totally resonated with my relationship with my firm’s auditor. In the first quarter of every year I meet with him. There’s always problems with the previous year’s accounts. Always. But he always has a tax compliant solution. Consequently I always go to this annual event armed with 2 paracetemol pills and a strong double espresso shot.

However in the last 3 months we are now engaging almost monthly due to the slew of tax rules that are coming out of the Kenya Revenue Authority faster than you can type the acronym KRA. I have nothing but great admiration for this all knowing all seeing entity as it has, in one fell swoop, made an entire country of tax paying businesses become their unpaid, unwilling and unapologetic foot soldiers of financial governance.

Towards the end of 2023, KRA informed the general public that all persons engaged in business would be required to issue an electronic invoice from their newly launched electronic tax invoice management system or e-TIMS. This would be with effect from January 1st 2024. Well the ordinary Kenyan, who operates his hustle below the non-paying tax radar, just shrugged their shoulders and went on doing their hustle. As KRA expected them to. The tax paying businesses however squared their shoulders and bristled.

KRA, while rubbing their hands in glee, made it crystal clear that any business expense would not qualify for tax deduction if it was not accompanied by an eTIMS invoice. So any spending by the business had to demonstrate that the provider of the good or service had issued a tax compliant invoice. Your boda boda rider who runs errands for the company and is paid weekly. Your corner kiosk that supplies milk and bread daily for the office tea. Your pig farmer delivering pigs to your packaged pork products factory. Your tea farmer delivering tea leaves to the tea factory. In simple terms: everybody.

I had to learn how to issue one very quickly for my personal small small side hustles including my beloved Business Daily weekly column, as my tax compliant business buyers threw me under the eTIMS bus. No invoice, no pay! My accountant offered to do it for me and I told him no. I needed to know how to work the KRA system in my personal capacity. The eTIMS runs off your computer, laptop or your phone and is fairly easy to maneouver once you go through mind numbingly boring training which only an accountant would equate to a thrilling James Bond movie.

I accepted and moved on. Until a supplier provided a service to the firm and issued their invoice. It was not an eTIMS invoice. We asked them for the appropriate invoice and they declined, saying that their business was not VAT registered and therefore did not fall within the ambit. We checked with our auditor who, picking himself off the floor after laughing for a full minute, reminded us what the KRA requirements were: simply non-negotiable. If we made that sizable payment he would disallow it as an expense when it came to the end year tax accounting process. We spoke to the supplier. They were categorical that they were not going to issue the invoice as they were not VAT registered and therefore didn’t need to issue an eTIMS invoice.

It was a classic Mexican stand off. To date we have both held our grounds. Every time I think of just caving in and just making the payment as the supplier has been a good partner, I remember the amount of taxes that we are having to pay as a business every month because we choose to be tax compliant. I remember that many employees are now actively pouring over their payslips to understand what the implications of recently introduced taxes are and negotiating salaries from a net income perspective.

Then the Treasury Cabinet Secretary read out the Kshs 3.99 trillion national budget last week. My friends, we can’t dig the 3.99 trillion hole alone. We need company. After all, misery loves company. And so KRA has me doing its recruitment for more taxpayers for free. I’m now a champion of suppliers issuing tax invoices. The more of them that are drawn into the tax paying dragnet the higher the chances that no new taxes will be introduced next year for the rest of us. Tax compliance leads to tax governance. Yours faithfully, Apostle Carol boarding onto MV Tax Damascus.

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X: @carolmusyoka