The Finance Act states: in Section 36 of the Excise Duty Act, 2015- Excise Duty shall be payable to the commissioner within 24 hours upon removal of the goods from the stockroom. The amendments passed in July 2023 finance act further states: “Closure of the transactions of the day means midnight of the selling day.
The two impacts of this amendment are one - creates unprecedented excessive manual labor used in determining reconciled positions and calculating tax payable to GOK in a timely and accurate basis. Two, since Kenya is predominantly a credit driven purchase economy, it becomes incumbent to finance the needed cashflow needed to settle the tax payable otherwise fines and penalties become due.
A Usecase -; Global manufacturer EABL reported a 22.1% drop in net earnings to Ksh6.8 billion in 6 months reducing dividends and citing the need to preserve cash and reduce long-term debt. The changes in excise tax administration created significant tax compliance challenges for manufacturers, with daily reconciliation tasks underpinning whether you can meet the deadlines without the need to suffer any penalties. EABL also expressed the attendant administrative difficulties and challenges in managing working capital due to the immediate tax payment requirements therefore slicing its previous solid retained earnings position.
How shall Churpy help in managing compliance to law?
Automating reconciliation operations -: Our product on Instant Reconciliation automates receivable management operations by automatically connecting to the ERP (reconciling all outstanding invoices), connecting to the bank and instantly provides a reconciled position and other interesting analytics through a graphical dashboard. The automated nature of our product ensures timeliness, accuracy, completeness and provides a massive head-start in the tax submission processes.
Working capital financing -: Working with multiple financiers like banks, we address the issue of a shorter working capital cycle by offering Trade Finance product. We also have a Supplier Lending Platform, a marketplace that seamlessly integrates with Multiple ERP Systems and connected to financiers, for enabling automated invoice discounting loans.
Churpy's role therefore is in ensuring reduced operational risk that could materialize due to increased manual operations. Kindly feel free to book a demo with us and explore the endless boundaries in regards to scaling your business operations and achieving success.
With Regards, Churpy!