Submitting an invoice that meets all invoice requirements in Kenya can help to speed up your payments. On the other hand, sending an incomplete invoice may make your business appear unprofessional, or delay your payment. Read on to learn more about sending an invoice in Kenya.
- Supplier Details
- Client Details
- Electronic Invoicing Regulations in Kenya
- What is the TIMS program?
- What is the Control Unit?
- How will this change impact the buyers?
Your invoice should have your official business name as part of the letterhead. This can be a registered business name or company name that you use to file your taxes.
If you are a consultant, using the names on your government issued ID or passport is acceptable. However, most corporate clients prefer that you use a registered business name.
Your physical business address should also be on the invoice. Even if you offered services to your client at their premises, this address should be your actual location and not your client’s address.
Your invoice needs to have a tax number that can identify your business when filing taxes. Individual transacting less than $50,000 annually can use their personal Tax number, instead of a VAT number.
If you have not registered your business in Kenya, you do not need to provide a VAT number. However, you can provide your country’s Tax number.
Invoice Number and the Word “Invoice”
The invoice must have a unique invoice number, and the word “Invoice” should appear at the top or header of the invoice.
In case you are sending a credit note, the number of the invoice that will be credited must be indicated. You should only send one credit note per invoice.
Phone Number and Email
You should provide your phone number and email as well in your invoice. Furthermore, it is best to use the same phone number and email that you provided them to use on the PO they sent you.
The invoice should also include a bank account number, account name, and bank name. The bank account name provided should match the business name you provided.
Other important banking details include the SWIFT code for USD transactions and IBAN for EUR. Most customers prefer to use the same currency as that of the PO.
Description of Good and Services
A description of the goods and services delivered, which should match what is in the invoice.
The date you shipped or delivered the goods.
The invoice should have a tax amount if applicable, and the tax rate used. It should also specify the net amount.
Total Payable Amount
The invoice should also have important customer details. You should extract these details from the invoice the client sent you. The client’s details on the invoice should include:
- Client’s legal business name
- Client Tax number
- The purchase order number (PO)
- Contact Details
Electronic Invoicing Regulations in Kenya
The Kenya Revenue Authority (KRA) issued a notice to all business owners and traders to get ready to start using electronic tax registers. In its notice, KRA noted that the new system will minimize errors encountered when filling of returns as well as lower tax compliance, which is a relief to the taxpayer.
The notice targets businesses that record an income worth Ksh. 5, 000, 000 (€43,000) and above, to have these control units installed ready for operation. Kenya is in the process of changing the issuing of its invoices in an attempt to be in full control of the whole system.
The KRA seeks to consolidate all the invoice data using the control units. They will automatically transmit the invoice information to the Tax Invoice Management System (TIMS) which is the latest system.
The Control Units will rely on end-of-day reports and individual transactions to the TIMIS. Once in the Tax Invoice Management System, the data is seamlessly transmitted to the KRA’s iTax system for easy filling.
What is the TIMS program?
According to KRA, the pilot phase will run from June 2019 all through to the end of 2020, working with various businesses on volition. The private sector is not left out during this transition period as KRA will incorporate their feedback into the system.
To make sure the program is effective by the time its fully operational, KRA seeks to rectify all errors encountered during the trial phase and that is why it incorporates the comments even from the private sector.
What is the Control Unit?
KRA demands that all businesses have installed the Control Unit (CU) which is a piece of hardware that they have certified. The CU can be integrated with businesses ERP or better still be installed on the businesses’ point-of-sale (PoS) or electronic tax register (ETR).
Upon receiving the data in good time, the CU will sign the invoice after ascertaining its validity then dispatch it to the TIMS. The CU also sends the daily report as well as any additional values to the issuer.
How will this change impact the buyers?
Changes in the invoicing system will require buyers to be updated on the new system so as to make sure they get the correct invoices. As much as there are cost implications, it is good for buyers to be aware of the requirements needed for the changes as knowledge keeps you at par with the others. The VAT Act will see some adjustments made to it to reflect on how the changes affect both the buyer and the seller.