Kenyan farmers and small businesses can now breathe easier, thanks to new regulations from the Kenya Revenue Authority (KRA). The recently unveiled Tax Procedures (Electronic Tax Invoice) Regulations, 2023, introduces a Sh5 million threshold, exempting most micro, small, and medium enterprises (MSMEs) from the obligation to produce electronic invoices for their sales. Nine transactions, including supplies by businesses with an annual turnover of less than Sh5 million, are excluded from the electronic tax invoice requirement. The KRA is addressing concerns about monitoring stock changes for small businesses, introducing a new system where transactions need to be shown rather than generating electronic invoices.

Despite these changes, starting this month, all businesses are required to produce an electronic tax invoice for every transaction to claim expenses during Income Tax filing. The National Treasury’s medium-term revenue plan proposes a five per cent withholding tax on farm produce sold to cooperative societies and agro-processors, aiming to expand the tax base and address perceived imbalances in tax contributions from the agricultural sector.