Greetings and welcome to the thirteenth Money Weekly Roundup of 2024! 

This week, the eTIMS registration deadline lapsed with the Kenya Revenue Authority (KRA) having managed to onboard only 22% of the targeted businesses. The taxman is adamant that there will be no extension.

Meanwhile, companies continue to announce their 2023 full year results alongside their dividends to shareholders.

As always, we’ve included some of our favourite personal finance articles in our Finance Tips section below.

Let’s dive in.

NEWS RECAP

What happened this week

🤔 eTIMS Deadline Lapses: What's Next?

The eTIMS registration period elapsed on March 31. Since then, the Kenya Association of Manufacturers (KAM) has sought an extension of the period to July 31st, but the taxman maintains that there will be no extension.

Up until the deadline, KRA had managed to onboard 202,291 taxpayers out of the targeted 915,000. This represents a 22.1% performance rate. Businesses not onboarded with the eTIMS system will face three major hurdles.

1. Business Disruption: They will not be able to transact with other businesses that will require an electronically generated invoice.

2. Tax Deductibility of Expenses: They will not be able to claim their expenses without the eTIMS-generated invoices.

3. Hefty Fines: As punishment for non-compliance, they will be required to pay twice the tax due.

However, KRA is still working with stakeholders to ensure that the remaining 712,709 taxpayers are onboarded. Part of the efforts KRA is putting in place include:

• Reverse Invoicing: This will be done on a case-by-case basis.

• Buyer-initiated Invoices: Plans are underway to roll these out for micro and small businesses

• Bulk eTIMS Invoicing: KRA is working with mobile network operators for large-volume businesses. 

• Taxpayer Incentivisation: KRA is also considering giving incentives to taxpayers who will insist on eTIMS-generated invoices during their transactions. Read More.

KRA says it is still engaging stakeholders from various industries to understand their challenges and craft tailored solutions for each. Specific examples include the tea and coffee industries. Exemptions from the punishment for failure to onboard will also be handled on a case-by-case basis. 

• Focus on B2B: KRA says its efforts are currently focused on business-to-business (B2B) transactions as opposed to business-to-consumer (B2C) businesses. Meaning, mama mbogas and street vendors could relax for a while.

• Ungazetted Regulations: Despite the aggressive push, regulations that are supposed to support its efforts are yet to be gazetted. KRA is still making the necessary adjustments as they consider taxpayer feedback. Read More.

💰 More Dividends as Companies Announce FY Results 

Stima Sacco members will be enjoying a 15% dividend payment and an 11% rebate on their deposits as the Sacco reports growth. Read More.

Similarly, Acorn Investment Management Limited has more than doubled its dividend payout from Ksh192 million in 2022 to Ksh480 million in 2023. Investors are set to receive a total of Ksh0.77 per unit in dividends. Read More. 

Britam shareholders, on the other hand, will have to wait longer to enjoy dividends as the financial services firm failed to declare dividends for the year ended December 2023 despite the company doubling its net profit to Ksh3.2 billion. Read More.

🔓 NSE Restrictions Lifted Despite Continued Exit By Foreigners

The Financial Times Stock Exchange (FTSE) Russell Index has lifted restrictions put in place against the Nairobi Securities Exchange (NSE) in 2022 when investors reported difficulties in accessing the dollar from the local forex market. Read More.

• Dollar Inflows: The improvement in the forex market and increased dollar supply have led to the global index provider lifting the restrictions. This comes as the NSE announced a Ksh18.4 million profit in the year ended December 2023.

• Investor Exodus: Despite the positive outlook on the NSE, the departure of foreign investors continues for the third consecutive month. In January and February, investors took out Ksh106 million and Ksh1 billion, respectively. March saw the highest selloff this year, amounting to Ksh1.2 billion.

😕 Shilling Gains, Inflation Drops, But Prices Still High

In the two months to the end of March 2024, the Kenyan shilling had gained 19% against the USD. The gain means that importers are now paying around Ksh30 less for every dollar worth of imports. Read More.

• Softer Inflation: Additionally, according to the Kenya National Bureau of Statistics (KNBS), the March inflation level stood at 5.7%, which is lower than 6.3% in February and 6.9% in January.

• High Cost of Living Persists: Despite the recovery in inflation in the first three months of the year, prices of goods and services remain relatively high compared to the same period last year.

• CBK Maintains Base Rate: The decelerating inflation has impacted the Central Bank of Kenya’s monetary policy decision to retain the base lending rate at 13%. 

💱 Kenya Plans Chinese, Japanese Bonds

Kenya is planning to tap into other markets by selling bonds to reduce western capital markets reliance and fund the Ksh326 billion deficit in the 2024/2025 budget. These bonds include; 

• Panda bond (China)

• Samurai bond (Japan) and;

• the Sharia-compliant Sukuk bond (Middle East)

Nonetheless, Kenya's credit rating remains 'B', which reflects the country's large funding needs, high domestic financing costs, external financing risk, and challenges to fiscal consolidation. These factors are a result of weak governance, a narrow revenue base, high interest payments, and costly external debts. Read More.

Want more details? Check our full weekly update here:

MONEY TIPS & TOOLS

This week’s finance tips

Welcome to Money254's Money Tips! Here, we share quick and easy tips that make understanding and managing your money a breeze. We break down the tricky parts of your finances and the financial landscape, making it simple and clear for you. Stay tuned for helpful tips every week.

MONEY254 #MONEYTOK OF THE WEEK

How eTIMS Makes it Hard to Evade Paying Tax

In today's #MoneyTok, we explore the 3 main changes coming into Kenya’s tax order following the adoption of eTIMS. One major change is that all tax-deductible expenses must be supported by an invoice generated via eTIMS making it harder to under-declare tax obligations. Watch Video 

@money254hq

𝐇𝐨𝐰 𝐞𝐓𝐈𝐌𝐒 𝐌𝐚𝐤𝐞𝐬 𝐢𝐭 𝐇𝐚𝐫𝐝 𝐭𝐨 𝐀𝐯𝐨𝐢𝐝 𝐏𝐚𝐲𝐢𝐧𝐠 𝐓𝐚𝐱 𝐢𝐧 𝐊𝐞𝐧𝐲𝐚. New #tax order requires all tax-deductible expenses to be supported by an invoice ge... See more

That’s a wrap for this week’s Money Weekly!

Remember that we can help you compare over 300 loans, savings accounts, current accounts, and more on our website if you’re thinking about your next product.

Eric and the Money254 editorial team.