Kenya’s Mandatory eTIMS Invoicing: What Every Business Must Know

Since September 2023, Kenya has required “every person who carries on business” to issue tax invoices through an electronic system operated by the Kenya Revenue Authority, known as eTIMS. What began as a VAT-focused compliance measure has since been extended in practice to almost every taxpayer, and from 1 January 2026 the Authority has started validating income tax returns directly against the electronic invoice data it now holds. For any Kenyan business still invoicing on paper, in Excel, or through an unregistered point-of-sale system, this is no longer a low-priority compliance item.

The Legal Basis: Section 23A of the Tax Procedures Act

Section 23A of the Tax Procedures Act, 2015 gives the Commissioner authority to “establish an electronic system through which electronic tax invoices may be issued and records of stocks kept,” and provides that “a person who carries on business shall issue an electronic tax invoice through the system established.” The provision was inserted by the Finance Act, 2023 and took operational effect from September 2023, with the Commissioner given power to exempt specific persons or transactions from the requirement by notice in the Kenya Gazette. Read on its own terms, section 23A is not limited to VAT-registered traders: the obligation attaches to carrying on business at all.

Who Actually Has to Comply

In practice, eTIMS compliance rolled out in stages. VAT-registered businesses were the first required to onboard, since VAT input claims already depended on valid tax invoices. The Authority subsequently opened eTIMS Lite, a simplified onboarding channel aimed specifically at non-VAT-registered taxpayers, sole proprietors, and small suppliers who fall outside the VAT net but still carry on business within the meaning of section 23A. The practical effect is that a small supplier who sells to a VAT-registered company, a farmer supplying a processor, or a jua kali workshop invoicing a corporate client is now expected to be issuing electronic tax invoices, not just larger VAT-registered enterprises.

What Counts as a Compliant Electronic Tax Invoice

The Tax Procedures (Electronic Tax Invoice) Regulations, 2024, gazetted as Legal Notice No. 64 of 2024, set out what an electronic tax invoice must contain: the seller’s PIN and the buyer’s PIN where input tax is being claimed, the invoice’s issue date and time, a unique serial number, an item-level description of the supply with quantities and applicable tax rates, the total gross amount and total tax amount, and a QR code together with a unique system identifier. The regulations also require that the invoicing system be operational at all times, and that a business notify the Authority within twenty-four hours of any system outage. A paper receipt, a manually issued invoice, or an invoice generated outside the approved system does not meet this standard, regardless of how detailed it is.

The Exemptions

Section 23A and the 2024 regulations carve out several categories of transaction from the electronic invoicing requirement: emoluments already subject to Pay As You Earn, imported goods cleared under customs law, investment allowances and similar internal accounting entries, interest income and financial institution charges, airline passenger ticketing, and services supplied by a non-resident person without a permanent establishment in Kenya. The Commissioner may also grant exemptions to specific persons or transactions by Gazette notice, including businesses that receive income exclusively through KRA-approved payment platforms that already transmit transaction data electronically to the Authority. Outside these defined categories, the general rule applies: no electronic tax invoice, no compliant record of the transaction.

The January 2026 Enforcement Milestone

The requirement existed on paper for over two years before it acquired real enforcement teeth. In a public notice, the Authority confirmed that, starting 1 January 2026, it will validate the income and expenses declared in income tax returns for the 2025 year of income against three specific data sources: TIMS and eTIMS invoice records, withholding tax data, and customs import records, all cross-checked through the iTax platform at the point of filing. This means a business filing its 2025 return can no longer assume that a plausible-looking expense figure will pass unchallenged; the Authority now has the electronic record to check it against, invoice by invoice, and the burden falls on the taxpayer to make sure its supplier base is actually invoicing correctly before the return is filed.