Kenya Revenue Authority's new income and expense validation framework will leverage electronic tax invoice data to pre-fill and authenticate taxpayer returns, significantly reducing under-declaration and discrepancies, according to David Busaule, Manager at the Business Transformation Office at the Kenya Revenue Authority (KRA).
Speaking during an interview on Radio Generation on Thursday, Busaule explained that the system is anchored on electronic tax invoices issued through eTIMS and is designed to simplify filing while enhancing compliance.
“The Commissioner now requires that certain expenses must be supported by an electronic tax invoice,” he said, noting that suppliers are expected to issue invoices to customers, especially where purchases are made for business purposes.
He clarified that while capturing a customer’s PIN is not mandatory for ordinary retail purchases, it becomes necessary where transactions relate to business expenses.
“If you’re buying for your business, of course, you’re required to provide your PIN,” he stated.
Busaule said the validation framework shifts KRA from a reactive enforcement model to a proactive one. Previously, taxpayers could issue invoices worth hundreds of thousands of shillings but declare significantly lower figures in their returns.
“Someone will do invoices of Sh500,000 and come to file a return declaring sh50,000,” he said.
With enhanced visibility through electronic tax data, the system will now flag such inconsistencies at the point of filing.
“To simplify the process and make it easier for you to file, we let you know what we have on your income and also what we have for your expenses,” he explained.
Taxpayers will be notified if declared figures differ from data already captured in the system and will be allowed to make adjustments with supporting documentation where applicable.
According to Busaule, the objective is not to overtax businesses but to ensure fairness. “We want a more equitable, fair tax system where everyone is paying their fair share of taxes — not one shilling more,” he said, emphasizing that large, medium, micro and small enterprises must all contribute proportionately.
He added that the initiative will also drive tax base expansion by encouraging businesses to transact with compliant suppliers who issue electronic tax invoices.
In the long term, KRA aims to develop a more comprehensive pre-filled return system, giving taxpayers a “360 view” of transactions related to tax and making compliance easier and more accurate.
