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INTRODUCTION OF ELECTRONIC TAX REGISTERS IN KENYA






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INTRODUCTION OF ELECTRONIC TAX REGISTERS IN KENYA. SEMINAR AT SAFARI PARK HOTEL 1 st December 2004 By SDC, VAT Mr. Philip Odeny. Introduction and Background. What is Electronic Cash Register - ECR ? What is Electronic Tax Register – ETR ? Other Fiscalised Electronic Devices - FED.
INTRODUCTION OF ELECTRONIC TAX REGISTERS IN KENYA

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Slide 1

INTRODUCTION OF ELECTRONIC TAX REGISTERS IN KENYA

SEMINAR AT

SAFARI PARK HOTEL

1st December 2004

By SDC, VAT

Mr. Philip Odeny

Slide 2

Introduction and Background

  • What is Electronic Cash Register - ECR ?

  • What is Electronic Tax Register – ETR ?

  • Other Fiscalised Electronic Devices - FED.

  • Why ETR and FED?

  • Who should use ETR and FED ?

  • Selection of ETR and FED.

  • Selection of Suppliers.

  • Role of Suppliers.

  • Role of Software Houses.

  • Implementation Plan.

Slide 3

What is Electronic Cash Register - ECR ?

  • Electronic Cash Register is a device used by traders to record sales and issue receipts.

  • It also stores information such as sales, stocks, and can also issue reports e.g. daily sales.

  • Electronic Cash Registers have been in use by taxpayers for long.

Slide 4

What is Electronic Tax Register – ETR ?

  • Electronic Tax Register (ETR) is a Cash Register but with Fiscal Memory.

  • Fiscal Memory is a special Read Only Memory built into the cash register to store tax information at the time of sale.

  • ETR can be used as stand alone or configured into a network.

  • ETR has special security features e.g. seal, memory, serial no., special technical specifications etc.

Slide 5

Other Fiscalised Electronic Devices - FED

Fiscalised Printers:

  • This are high Speed Fiscal Printer connected in a computer network to store every sales transaction in its Fiscal Memory while it issues receipts to taxpayers.

    Electronic Signature Devices:

  • ESD is used in conjunction with the accounting system

  • For a document to be valid it must bear the electronic signature

  • ESD applies to computer based, printed tax documents issued to a third party

  • The text of the invoice passes through the ESD and is saved

  • ESD performs an algorithm over all signatures Issues a HASH e.g. SHA-1 algorithm to make every transaction virtually unchangeable.

  • Retail fiscal units in the realm of business to business transactions may use ESD for invoices, transport documents etc.

Slide 6

SAMPLE TYPES OF DEVICES

Slide 7

Electronic Tax Registers

  • There is a whole range of ECRs for fiscal and non fiscal purposes. The difference is presence of FISCAL MEMORY UNIT.

Slide 8

Other Devices

Hi Speed Fiscal Printer:

Has two RS232 ports for PC online operation and barcode

POS Compact Modular System:

Aimed at the software developer who wants to sell a customized POS solution or at the retail equipment dealer who wants a turn-key POS solution with advanced software.

Embedded-PC model is built using

the CPU and comes in a very small shape, contains the AC power supply and hard disk.

Slide 9

COMPUTER SYSTEMS AND ESD

ELECTRONIC SIGNATURE DEVICE

Request

PC

Signature

“SIGNED” Invoices, Receipts Etc.

PRINTER

Slide 10

Other Devices

Telecom:

Ethernet and Internet / email enabled cash registers are low cost, stand alone ETRs.

Electronic Signature Device:

ESD has many shapes and its functions have been previously discussed

Slide 11

Why ETR and FED?

ETR:

  • Ordinary ECR is prone to falsification.

  • Has a Tax memory that carries information on tax.

  • Tax memory is a programmable read only memory (EPROM or PROM).

  • The tax memory capacity should store data for at least 5 years or 1800 day transactions.

  • Issue fiscal receipts which are easily identifiable for inspection purposes & daily fiscal summary report.

Slide 12

Who should use ETR and FED ?

  • KRA intends to enforce the use of ETR and FED on EVERY taxpayer.

  • Selection of the device to use depends on the needs of the business.

  • ETR will mainly be used by small scale retailers.

  • ESD and printers are to be used by computerised traders.

Slide 13

Selection of ETR and FED.

  • There exist various types of ETRs each with its functions.

  • This depends on the needs of a trader and each model/machine will be vetted according to the stipulations of the law.

Slide 14

Selection of Suppliers

  • This exercise involves advertisement through press

  • Submission of request to supply by the suppliers.

  • Inspection of requests and brochures by the technical committee with respect to criterion defined in the ETR Regulation.

  • Pre-qualification of suppliers who meet requirements.

  • Request of sample machines for inspection by technical committee.

  • Approval process by technical committee results in appointment of suppliers who meet ALL requirements set forth.

  • Among salient features the selection committee shall verify are financial standing, technical background, experience in similar undertaking and branch network of the supplier.

Slide 15

Role of Supplier

  • To work with KRA to ensure that the models they supply fulfill the requirements of the ACT.

  • Ensure continuity of the model by maintaining ceaseless backups.

  • Work with KRA to improve the system through innovation.

  • Work with KRA to identify offenders.

  • Detailed identification of the manufacturer or importer;

Slide 16

Software Houses

  • The software developer who wants to sell a customized POS solution in form of Drivers or at the retail equipment software shall be essentially “pointing” or “re-aligning” or “to talk” to the POS systems to save copies of all transaction into fiscal memory.

  • The software shall ensure re-use of some existing POS using ESD or added Fiscal Modules that shall be guided in operations using software drivers created or sourced by Software Houses.

  • Innovation of new technologies.

Slide 17

ADVANTAGES

  • More jobs for technicians

  • More jobs for the software houses

  • Better control and management of business by traders

  • Shorter audit periods by taxman

  • Less paper work

Slide 18

Implementation Plan

  • This is a long term project where more emphasis should be placed on correct implementation in addition to time limits.

  • KRA is to lead the whole process and has to keep taxpayers informed of the steps to follow.

  • Implementation plan is being worked and will be publicised.


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