The Kenya Revenue Authority (KRA) has introduced georeferencing to the electronic Tax Invoice Management System (eTIMS) to track the physical origin of every digital invoice.
This is part of government’s efforts to seal revenue leaks caused by fictitious invoicing, a practice that costs the taxpayer billions of shillings every month.
According to George Obell, KRA Commissioner for Micro and Small Taxpayers, the taxman is currently contending with a massive influx of “ghost invoices.”
“Almost every month we are dealing with between Ksh. 2 billion and Ksh. 2.5 billion worth of Value Added Tax in fictitious invoices,” Obell noted. Annually, this translates to a staggering Ksh. 30 billion revenue gap.
Fraudulent businesses have long used these fake documents to inflate their operating expenses, reduce taxable profits, and claim irregular VAT refunds.
Every eTIMS invoice will be permanently linked to the precise GPS coordinates of the location where it was generated.
This location-based data allows KRA to:
- Spot patterns where multiple suspicious invoices are issued from a single location.
- Ensure that invoices are originating from legitimate places of business rather than residential houses or non-existent addresses.
- Map out the networks of “missing traders” who operate in the shadows to supply the market with fake documentation.
Looking ahead, KRA is preparing to launch a Stock Management Module within eTIMS. This tracker will ensure that businesses can only issue invoices for goods they actually have in their inventory.
By linking sales directly to recorded stock levels, the KRA aims to make it mathematically impossible to issue invoices for “phantom” goods. Particular focus is being placed on high-volume sectors, such as fuel stations, where invoice fraud is rampant.
Under Section 16(1)(c) of the Income Tax Act, only expenses supported by valid eTIMS invoices are deductible.