Limitation of tax allowable expenditure if not compliant with electronic tax invoice
management system
Effective 1st January 2024, the Finance Act aims to restrict the allowance of
expenditure or loss in cases where invoices are not generated from an electronic tax
invoice management system unless the transactions fall under exemptions outlined in
the Tax Procedures Act, 2015. The objective is to incentivize businesses to engage
exclusively with compliant entities. This measure is expected to strengthen monitoring
and compliance enforcement efforts by the Commissioner of Taxes, but its
effectiveness relies on the smooth functioning of the TIMS platform to ensure seamless
operations and accurate documentation of transactions.
Implication
This means that Effective 1st January 2024, Taxpayers should ensure they transact with
entities that are compliant with the above and that all expenses incurred are
generated from TIMS devices. Exemptions to this rule include expenditure incurred in
respect to salaries and wages, capital allowances such as depreciation and imports.
Prepared by:
CPA Antony K Riungu
CPA-K, BBM, MBA
