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					INTRODUCTION OF ELECTRONIC TAX
      REGISTERS IN KENYA
         SEMINAR AT
      SAFARI PARK HOTEL
         1st December 2004

           By SDC, VAT
          Mr. Philip Odeny
  Introduction and Background
1.    What is Electronic Cash Register - ECR ?
2.    What is Electronic Tax Register – ETR ?
3.    Other Fiscalised Electronic Devices - FED.
4.    Why ETR and FED?
5.    Who should use ETR and FED ?
6.    Selection of ETR and FED.
7.    Selection of Suppliers.
8.    Role of Suppliers.
9.    Role of Software Houses.
10.   Implementation Plan.
     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.
       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.
      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.
    Electronic Tax Registers
• There is a whole range of ECRs for fiscal
  and non fiscal purposes. The difference is
  presence of FISCAL MEMORY UNIT.
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.
COMPUTER SYSTEMS AND ESD


                    Request



                    Signature



    “SIGNED”
    Invoices,
    Receipts Etc.
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
         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.
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.
    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.
         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.
          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;
            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.
           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
       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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