E-TIMS? What's that? Kenyans in dark as Treasury pushes to expand tax bracket

Treasury CS Njuguna Ndung'u. [Elvis Ogina, Standard]

The rollout of the electronic Tax Invoice Management System (eTIMS) by the government to streamline revenue collections risks stalling as most Kenyans claimed they are in the dark about how the system works.

Farmers, small-scale traders, and other businesses say they are yet to fully understand the system but describe it as a major hindrance to their successes.

Several groups told The Standard that they are facing tough hurdles in adapting to the new system and claim they will opt for black-market trade to escape what they described as tough demands by the Kenya Revenue Authority (KRA).

The agricultural sector is among the worst hit by the new system as farmers claim their payments some companies have already started withholding their payments for failing to register to the system.

While eTIMS aims to streamline tax collection and reduce human error, several farmers claim the system is a burden in an already hit agricultural sector. Only a few of the farmers admitted they are aware of the new system while a huge number claimed they are only hearing about it from third parties or after they have been denied payments by firms.

In the Mt Kenya region, avocado farmers claimed they are barely struggling to make ends meet after companies failed to offset their payments over their failure to register to the system.

Farmers Murang’a and Kiambu counties said the exporters have not remitted millions of shillings as they lack the eTIMS as ordered by the Kenya Revenue Authority (KRA).

Speaking at Kenol market in Kandara, David Kariuki and Wainaina Mbugua, avocado farmers, called on the parliament to amend the Finance Act 2023 to exempt the farmers from facing the three per cent taxation.

Kariuki said after the harvesting season was opened on March 1, he delivered two and a half tonnes to an exporter who is yet to remit his dues owing to the lack of the invoice.

“This is a major problem facing avocado farmers in the 36 counties and which can be resolved through amending of the Finance Act 2023,” said Kariuki.

Monica Nyambura, a farmer in Kandara said they prefer selling their produce to brokers, for fear of the new tax system.

“Since I’m not registered for the invoices, I prefer to sell my produce at Thika and Githurai markets where payment is effected immediately,” said Nyambura.

In a change of strategy to meet revenue targets, KRA now requires all persons carrying on business including those in the informal sector and small businesses to electronically generate and transmit their invoices to KRA through eTIMS. 

In Nyanza, traders claimed they are yet to migrate to the system because they do not understand it.

Maurice Akumu, a rice supplier in Nyando said most traders and farmers are now opting for middlemen and backstreet markets to sell their products.

“I do not understand how to generate the invoice required by KRA. Most of my colleagues are also opting to sell directly to middlemen without engaging the bigger companies,” he said.

Similarly, in Western, farmers claimed they were confused by the new system.

Fredrick Rono, a maize farmer in the Kiminini constituency said their situation is worsened by the lack of steady internet in their region.

Complicated system

“The system is too complicated for someone like me who has limited experience with computers. We received minimal training, and frankly, it wasn’t enough to navigate the eTIMS platform effectively. The internet connectivity here is unreliable, and when it does work, the system is slow. It takes forever to generate a single invoice,” said Rono. His concerns are echoed by Jane Kwamboka, a vegetable supplier, who is worried that eTIMS might disrupt her business flow.

“Time is crucial in our line of work. Our produce has a short shelf life, and delays in issuing invoices could lead to rejections from buyers. The learning curve for eTIMS is simply too steep for us at the moment,” stated Kwamboka.

Mark Chelimo, a farmer in Nakuru, claims that the eTims adds deduction to suffering farmers.

Chelimo has planted maize on his 60-acre land in Ngongongeri and wheat on his 30-acre farm in Ngata within Nakuru County.

As a maize farmer, he will be deducted five per cent of any sales he makes after the introduction of eTIMS.

“They want all farmers to comply with tax payments but so many have arrears and penalties. The abrupt introduction and near deadlines are a burden,” said Chelimo.

Regina Wanjiku, a small-scale farmer of vegetables and herbs in Gilgil, said farmers will avoid eTIMS because they do not know what it is.

“I just heard about eTIMS but I do not know what it is. It may be good for farmers but how do we subscribe to something we do not know,” she said.

According to Wanjiku, the introduction of eTIMS was done abruptly and without proper sensitisation and education to small-scale farmers and businesses.

“People tend to take negatively to what they do not know. If we are expected to embrace eTIMS then let the government engage farmers, hold workshops, and educate them on the importance,” she said.

KRA introduced eTims for farmers and small businesses on March 4 and said they must electronically generate and transmit their invoices to KRA via the eTIMS.

However, some farmers acknowledge the potential benefits of eTIMS.

Isaac Muchogu a wheat farmer, sees the advantages of a paperless system.

“While the initial adjustment is difficult I believe eTIMS can improve transparency and record-keeping in the long run. Once we get used to it, the efficiency gains could be significant.”

Muchogu highlights the need for additional support for farmers transitioning to eTIMS.

Butali Sugarcane Farmers Association chairman William Kopi termed the system as unrealistic and hard to achieve. “How will an illiterate woman owning less than half acre land under sugarcane comprehend e-TIMS? It is not possible to subject such a farmer to e-tims. The government must rethink this and exempt farmers from it,” said Kopi.

“It is a big challenge, and we shall be piling pressure on the government to rethink it because smallholder farmers are already finding it complicated.”

Patrick Andati, a boda boda rider from Kakamega North, wondered how the government expected him to pay tax through the system and at the same time raise funds for the motorcycle he took on loan.

“Currently, the business is not good, and sometimes it is not even possible to raise Sh500 in a day. What are we supposed to do? He paused.

“It is unrealistic,” said Elkana Ondeyo from Vihiga County.

[Jackline Inyanji, Boniface Gikandi, Martin Ndiema, Daniel Chege and Clinton Ambujo]