Afcacia

Kenya’s tax authority, the Kenya Revenue Authority (KRA), is set to deploy its electronic tax invoice management system (eTIMS) at fuel stations nationwide. .

Beginning in June 2025, this integration will capture detailed records of all fuel transactions, issuing electronic receipts for every diesel and petrol purchase, allowing the KRA unprecedented oversight of fuel sales.

The move seeks to close loopholes enabling VAT-related fraud. Some businesses have been exploiting unclaimed fuel receipts to apply for VAT refunds on fake claims. The eTIMS system, mandatory for businesses to file invoices as proof of expenses, will also provide KRA with insights into motorists’ fuel consumption patterns.

“This fuel station integration through eTIMS will validate invoices and enable real-time receipt tracking for VAT compliance,” KRA disclosed in an internal document, adding that motorists will soon be required to enter their personal identification numbers (PINs) to access e-receipts. This measure is expected to deter fuel stations from underreporting sales, a tactic previously used to reduce tax liabilities.

KRA’s chief of eTIMS, Hakamba Wangwe, stated that the system’s full rollout is anticipated by mid-2025, and pilot programs with select stations are currently underway. “This solution will connect fuel dispensers directly with point-of-sale systems, ensuring KRA visibility over each sale,” he said.

The plan is part of a broader push to enhance revenue collection in Kenya, targeting the fuel sector—a significant contributor to the country’s VAT refunds, totaling Sh393.6 billion.

The Treasury has identified the petroleum sector among the key areas for improving VAT compliance, as tax expenditure on imported VAT nearly doubled from Sh8.8 billion to Sh17.2 billion in one year.

Following the recent implementation of eTIMS, the KRA reported domestic VAT collections reaching Sh314.1 billion for 2023/24, exceeding targets.

Expanding eTIMS to fuel stations could further bolster compliance, particularly given that only expenses backed by eTIMS invoices will be deductible for tax purposes from January 2024.

The tax agency is also working to encourage small businesses to adopt the system, finalizing a WhatsApp chatbot that will generate electronic tax invoices, simplifying the filing process for small traders and expanding the tax base.

This initiative aligns with President William Ruto’s administration’s intensified efforts to clamp down on tax evasion, following public backlash and recent protests.