ELECTRONIC TAX REGISTER SYSTEM AT A GLANCE Do you love Kenya? Ask for a fiscal receipt ISO 9001:2008 CERTIFIED DOMESTIC TAXES DEPARTMENT 2011 / 2012 To comply is always cheaper than not to comply
1. What is Fiscalization? This is the enactment of special laws to make it obligatory for any person who sells goods or services to consumers to use approved tax registers and other devices that have fiscal memory to issue sales documents. This provides a reliable means for The Authority to check the total sales and tax payable by individual taxpayer 2. What is a fiscal memory? A fiscal memory is special Read Only Memory (ROM) built into the tax register to store sales and tax information at the time of sale. The information is stored permanently for at least five (5) years. 3. Legal framework The requirement for taxpayers to use ETR was introduced in the Budget of FY 2004. The Finance Act made the following amendments to the VAT Act: The Seventh Schedule to the VAT Act was amended to empower the Commissioner to require any person to use an Electronic Tax Register of such type and description as may be prescribed for the purpose of assessing information/transactions, which may affect his tax liability. The same schedule was also amended to provide for recovery of the full costs of the electronic tax register from the tax payable by the tax payer who purchased the register. The Eighth Schedule to the VAT Act was amended in PART B by introduction of Item 28 which zero rates (exempts) VAT on purchase or importation of ETRs purchased prior to 30th June 2006. The type and description of the ETRs to be used have been prescribed in Legal Notice No. 110 of 8th October 2004 entitled THE VALUE ADDED TAX (ELECTRONIC TAX REGISTERS) REGULATIONS 2004. The same Legal Notice specifies that Any person who fails to comply with these Regulations shall be guilty of an offence and shall be liable to a fine not exceeding five hundred thousand shillings or to 1
imprisonment for a term not exceeding three years or to both. Legal Notice No. 54 of June 16, 2006 requires that all invoices/receipts for input tax claim must be ETR generated. With effect from 12/06/2010, a supplier of goods and services on credit is required to issue a tax invoice immediately at the time of delivery or sale and not within 14 days as before. 4. What is an Electronic Cash Register (ECR)? Electronic Cash Register is a device used by traders to record sales and issue receipts. It also stores information such as sales, stocks, and can also issue reports e.g. daily sales, monthly and annual sales. Electronic Cash Registers have been in use by taxpayers for a long time. 5. What is an Electronic Tax Register (ETR)? Electronic Tax Register (ETR) is a Cash Register but with Fiscal Memory. Because of the fiscal memory, ETR is also known as Fiscal Cash Register (FCR). ETR has several other special security features including: - Laden or Epoxy resin seal. - Special software specifications. - Disconnection/reconnection report. - Self enforcing daily report. - Special password for user All essential data such as the totals of each tax category and the total turn-over for each day are permanently stored in the fiscal memory. Each tax register has a unique register identification number securely written in the fiscal memory and assigned to the owner of the tax register when he buys it. ETR is mostly used as stand alone but sometimes it can be configured into a computer network. ETR can be programmed with PRICE LOOK UP (PLU) so that sales are 2
made by keying in product codes or by use of bar code scanner or be left open so that prices are keyed in at the time of sale. ETR can be programmed with stock records so that stock levels are updated automatically as sales are made. 6. Other Fiscalized Electronic Devices (FED) 6.1 Electronic Tax Printer An electronic tax printer is a printer that is connected in a computer network to store every sales transaction in its fiscal memory while it issues receipts to customers. It is basically similar to printers that are currently being used in shops, supermarkets, except for the fiscal memory. 6.2 Special Secure Fiscal Device for Record Signing (SSFDRS) or Electronic Signature Device (ESD) This is a record- signing device that is suitable for taxpayers who have computerised accounting systems that issue letter-headed (pre-printed) invoices. This device uses a special computer programme to generate a unique number using the details of the sale including the name of the purchaser, goods sold, quantity sold, date of sale, time of sale etc. It issues this number to the computer at the time of issuance of invoice so that it is printed at the end of the invoice. The number is unique in that no two numbers can be similar. This makes it easy to distinguish between authentic and fake invoices. In addition the number is permanently stored in the device for audit purposes against the copies of the invoices stored in the computer system. 7. Documents generated by Electronic Tax Register, and other Fiscalised Devises 7.1. Transaction Receipt This is the receipt printed in respect of each sale as it occurs. Such receipts printed from a register shall contain:- (i) the name and address of the user of the register; (ii) the VAT number of the user of the register; 3
(iii) the personal identification number (PIN) of the user of the register; (iv) the unique identification number of the register; (v) Identity of supply, quantity, unit price, tax rate chargeable, and total value of the sale; (vi) the tax amount payable; (vii) the date and time of issue of the receipt; (viii) the total amount payable, inclusive of tax; 7.2. Daily Report Approved Electronic Tax Registers must be designed to generate summary of transactions made each day by tax rate. This is called Z reports and must be used daily even if no transaction has taken place. 7.3 Monthly Report This report contains a summary of daily sales for the month's transactions by tax rates (Monthly Z-Report). 7.4 Annual Report This is a summary of monthly sales for the year. 7.5 Other Reports Fiscalized devices can issue sales reports for any period required by the user provided that the sales were recorded using that same device (Periodic Z- report). 8. Types of Fiscal Electronic Devices to be used by Taxpayers 8.1 Electronic Signature Device [ESD] A taxpayer who uses a computerized accounting system to issue financial documents such as invoices and transport documents needs to fiscalize the procedure by the use of ESD only. 8.2 Electronic Tax Printer [FP] A taxpayer who uses a computerized accounting system to issue exclusively retail receipts (cash sales) is not obliged to use ESD. He can use Electronic 4
Tax Printer. He may, however, be required to use ESD instead if the Commissioner finds it necessary. A taxpayer who issues both retail receipts and invoices using computerized accounting system has to use Electronic Printer for retail receipts & ESD for invoices & other accounting documents. 8.3 Electronic Tax Register [ETR] A taxpayer who issues only hand written retail receipts shall use ETR to generate cash sale receipts. A taxpayer issuing hand written financial documents will be required to issue receipts using ETR to be attached to the hand written invoice. 9. Roles of Key stake holders in the ETR System 9.1 Taxpayers To ensure that sales are made through electronic tax register. To ensure that each customer leaves his premises with a fiscal receipt. To keep daily, monthly and annual reports. To submit VAT returns based on the fiscal documents. To maintain a ledger for repair and maintenance of the device. To report to the Authority any one not using ETR to sell 9.2 Suppliers To work with KRA to ensure that their models fulfil the requirements of the VAT Act. To provide the right ETRs to taxpayers and ensure they are installed. Work with KRA to improve the system through innovation. To train taxpayers on the usage of ETRs. Ensure continuity of the model by maintaining ceaseless backups. Work with KRA to identify offenders. 9.3 Staff To enforce issuance of fiscal receipts. To educate public on the usage of ETR 5
To identify, educating and prosecuting perpetrators. To audit and inspecting functionalities of fiscalised devices. To suggest potential improvements. 10. Advantages of ETR and other fiscalised devices Improve record keeping by taxpayers and Minimize theft by servants in shops. Reduce cost of maintenance of records by taxpayers since daily, monthly and annual report will automatically be produced by ETR. Authenticate documents for tax and other purposes. Reduce tax audit period and paperwork for taxpayer and tax auditors. Reduce fraudulent accounting and hence improve tax revenue. Improve management of business through electronic connectivity. 11. Implementation and cost Taxpayers, who purchased and installed the ETRs prior to 31st December, 2006 were allowed to deduct the cost in their monthly VAT tax returns after ETR purchase and installation documents approval by KRA. 12. Compulsory ETR Device Registration Register all your ETR Devices by submitting the following ETR purchase and installation documents with copies to the nearest KRA Domestic Taxes Offices: Invoice Delivery Note Job Card or Installation sheet 1st Z-report (Z-report No.1) The documents will be endorsed and data will be captured into KRA system noting ETR Compliance. 6
13. Breakdowns A taxpayer whose device breaks down is required to notify the Commissioner and their Supplier within 48 hours in writing. The device should be repaired by Supplier and be operational within 48 hours of notification. During repair period Supplier will use standby fiscal devices only in the absence of other fiscal devices or standbys can an alternative system be used and a proper trail of transactions maintained. 14. Online Filling Submission of VAT3 returns is now online, VAT C which is an attachment to the return captures among other details the information contained in the Z report. 7
15. List of Approved ETR Suppliers 1. Petken Limited Bruce Hse, Nairobi, Tel: 20-241811/22/23 Box 46200-00100 2. Copy Cat Limited Kijabe Street, Nairobi, Tel: 20-226701 Box 49872-00100 3. Advatech Office Soin Arcade, Westlands, Nairobi Supplies Ltd Tel: 20-722-516699/4447990/4441813 Box 13690 00800 4. Express Nairobi,Tel: 20-630000, Box 22709 00400 Automation Ltd 5. Paypoint Solutions Anniversary Towers, Nairobi Tel: 20-218104, Box 836 00606 6. Sharp Electronics Wambui Rd, Off Thika Rd, Nairobi Technology Ltd Tel: 20-316171/6752812/3 Box 30857 00100 7. Total Solutions Ltd Nairobi, Tel: 20 374 8347/92/7007 Box 43427-00100 8. Awal Ltd Off Msa Rd, Nairobi, Tel: 20 531 702/809 Box 17983-00500 9. Data Reliability Mercantile Hse, Koinange St., Nairobi Networks Ltd Tel: 20 248324/317680, Box 10111-00100 Box 10111-00100 10. Knots Computers Occidental Plaza, Westlands, Nairobi Ltd Tel: 20 3740465/3743656 Box 10909-00400 8
11. Interpay Ltd Bruce Has, Nairobi, Tel: 20 313358/9 Box 3333-00200 12. Prima Internationa Nairobi, Tel: 20 2725546 Ltd Box 5725-00200 13. Valueplus Ltd Rehani Hse, Nairobi, Tel: 20 245099 Box 10208-00100 14. Pergamon Kimathi Hse, Nairobi, Tel: 20 4348384 Company Ltd Box 25749-00603 15. Orient Express Uniafric Hse. Koinange Street, Nairobi Services Limited Tel: 20-514139/229297, Box 51018-00200 16. Sharp Elonex Capital Hse., Moi Ave., Nairobi Technology Tel: 20 342945, Box 16690-00100 17. Peckerwoods Ltd Panesare Center, Off Msa Rd., Nairobi Tel: 20-828370, Box 16613-00620 18. Japan Business Simco Plaza, Lusaka Rd., Nairobi Machine Tel: 20 556894, Box 19081-00100 Corporation (Africa) Ltd 19. Bititec Systems & Agip Hse., Haile Selassie Ave., Nairobi Suppliers Ltd Tel : 0722 439930/ 0735 216776 Box 31842 00600 20. East African Fiscal Westlands Tel: 0733514778 21. Benser Tel: 311453,214298 - Near Globe Cinema, Afya Co-operative House, 2nd floor Rm1234 9
22. Mustek E.A Ltd Tel: 020-3752175-9, Westlands-MP Sha Opposite Mesha Place Building 23. Attain Ltd Tel: 020-2081268/0722746953 Building vision plaza mombasa road 24. Compulynx Ltd Tel:3747060/61, Along Parklands Road,centre point 25. Wisepower Tel: 0722738517 Technology Ltd 26. First Mark Tumaini Hse, 3rd Floor, Rm 307 Solutions Ltd Tel:35530221,2152559-50 27. Bright Tel;244438 Technologies Disclaimer This information is for guidance only and is subject to changes when law is amended. Any omission do not absolve the taxpayer from making true and correct returns and statement of accounts. For further information, please visit the nearest DTD office or contact: KRA contact centre - Tel 4999999 or Mr. Kennedy Nyasinga - 020 2813134 Mr. Peter Ndubai - 020 2817080 Mr. Andrew Chege - 020 2817073 Taxpayers Education Programme - 020 2816095 / 020 2813068 REVISED: ZGO/DGW/14/09/2011 10
FOR FURTHER DETAILS http://www.kra.go.ke or any approved supplier