David Ndii Explains Why KRA Will Go After Motorists

David Ndii, Chairperson of President William Ruto's Council of Economic Advisors (CEA), has offered an explanation as to plans by the Kenya Revenue Authority (KRA) to link its electronic Tax Invoice Management System (eTIMS) to fuel stations to track motorists’ consumption of Super Petrol and Diesel.

KRA announced this in its latest move to weed out tax cheats and boost revenues by billions of shillings. This will mean that every purchase of petroleum products from a fuel station from June 2025 will be accompanied by an eTIMS receipt or electronic notice, giving KRA a full view of the scale of business undertaken by stations across the country.

Simply put, motorists will be expected to key in their KRA personal identification numbers (PINs) to trigger the eTIMS receipt.

“To streamline VAT on petroleum products, KRA is in the preliminary phase of implementing electronic tax invoicing at fuel stations through eTIMS fuel stations system integration. This will allow the ability to validate invoices or receipts in real time to facilitate tax refunds,” KRA announced as reported by Business Daily.

Ndii on Saturday, October 26 responded to a Kenyan who had raised concerns over KRA's increasing appetite for tax collections, stating that the platform will track vendor’s VAT tax compliance.

“The purpose of this app is to track the vendor’s VAT tax compliance, not the customers. It stands to reason that if you have been charged VAT on fuel, the tax should end up with the Govt, not the petrol station owner,” he said on X.

Ndii also addressed concerns about the consolidated cargo business, labelling it a potential “Trojan horse” for mobile phone smuggling. In one of his posts, he emphasized the importance of closing tax leakage loopholes to ensure fair taxation across the board.

“The consolidated cargo business is a trojan horse for mobile phone smuggling. We are sealing tax leakage loopholes one by one,” Ndii stated, adding “It is very unfair for tax burden to fall on payroll workers and corporates who can’t escape the tax net. You are going to be hearing a lot of stealing.”

The integration is aimed at tightening the authority’s visibility of transactions at the pump and weed out filing of fictitious Value Added Tax (VAT) claims as well as monitor fuel station sales. Rogue traders have been seeking receipts from petrol stations that are not picked by motorists and use them to seek VAT refunds from the taxman on the strength that their businesses consumed the fuel.

The system, which demands businesses to file receipts or invoices with the KRA as proof of expenses, is aimed at widening the tax base as big companies report to the authority of small firms that act as their suppliers. It also helps curb the under-declaration of sales by petrol stations to narrow profits and pay lower taxes.

The visibility sales will also help the KRA map the spending patterns of motorists, with the target being consumers who have high fuel bills but have little to show in terms of taxes remitted.

The Treasury has identified the petroleum products sector as one of the key drivers of tax refunds or expenditures that currently stand at Ksh393.6 billion. Tax refunds or expenditures are the products of goods and services that are VAT zero-rated. Under zero rate, firms are allowed to seek refunds from the taxman for VAT they pay on inputs like electricity, fuel and raw materials.

“The main contributors to VAT expenditure were financial and insurance services, electricity, oil, gas, steam, and air conditioning. Tax expenditure on imported VAT increased from Ksh8.8 billion in 2021 to Ksh17.2 billion in 2022. This increase is mainly attributed to the increase in import VAT on oils,” states the Treasury.

Energy and Petroleum Regulatory Authority (EPRA) data indicates that there are 140 registered oil marketers in the country that sold 5.46 billion litres of petroleum products locally in the year to June.

According to KRA’s Chief Manager in Charge of eTIMS, Hakamba Wangwe, the new system could be launched nationwide by June 2025.