eTIMS Kenya KRA is the Kenya Revenue Authority‘s mandatory electronic platform for generating, transmitting, and validating tax invoices, which has expanded since its introduction to cover virtually all business taxpayers, not only those registered for VAT. eTIMS is often described as a VAT compliance tool that KRA later extended to other businesses, but that framing understates its actual legal basis: the underlying obligation comes from Section 23A of the Tax Procedures Act, inserted by the Finance Act, 2023, which applies broadly to “a person who carries on business”, not specifically to VAT-registered persons. Understanding that distinction matters for any business trying to work out whether it is actually caught by the requirement, since “I am not VAT-registered” is not, on its own, a complete answer to whether eTIMS applies.
eTIMS Kenya KRA: What It Is
eTIMS transmits invoice data to KRA in real time or near-real time. When an invoice is issued through an eTIMS-integrated system, the invoice details are sent to KRA, which assigns a unique identification number to each invoice. This allows KRA to cross-reference what one business reports as a sale against what the counterparty reports as a purchase, closing a reconciliation gap that was previously left to manual audit. Section 23A(2A) sets out specific mandatory content for an electronic tax invoice, including the words “TAX INVOICE”, the supplier’s name, address, and PIN, the purchaser’s name, address, and PIN where applicable, a serial number, and the date and time of issue alongside the date and time of supply if different. Invoices not generated through eTIMS are not valid tax invoices for these purposes, which means a customer cannot claim input VAT, or in many cases an income tax deduction, against a non-compliant invoice.
eTIMS Kenya KRA: Who Must Comply?
Section 23A(2) imposes the obligation to issue electronic tax invoices and maintain stock records on “a person who carries on business”, a deliberately broad formulation that is not limited to VAT-registered taxpayers. All VAT-registered persons must use eTIMS, but the obligation does not stop there; KRA has applied the requirement to non-VAT-registered businesses as well, consistent with the statute’s own wording rather than as an informal extension layered on top of a narrower VAT-specific rule. The Act does give the Commissioner power to exempt a person from the requirement by notice in the Gazette, and certain categories, including specified emoluments, fall outside the requirement by the terms of the section itself. A business should not assume it is exempt simply because it is small or informal; absent a specific Gazette exemption that actually covers it, the safer working assumption is that the obligation applies, and a business relying on an exemption should be able to point to the specific Gazette notice that grants it rather than a general impression that small businesses are excused.
eTIMS Kenya KRA: How to Register
There are three access options. The eTIMS Taxpayer Portal is web-based and suitable for low-volume users issuing a small number of invoices manually. The eTIMS Client is downloadable software suited to a business with moderate invoice volumes and its own point-of-sale or invoicing setup. The eTIMS Virtual SDC integrates via API with existing accounting software, including platforms such as QuickBooks, Sage, and Tally, and is the appropriate option for a business that wants invoice issuance to flow directly from its existing accounting system rather than requiring duplicate manual entry. Registration for any of these options is done through the business’s KRA iTax account, and the choice between them should be driven by actual invoice volume and existing software, not simply by which option happens to be the default suggested at registration.
Record Retention
The Tax Procedures Act requires a person to retain books of account, records, and supporting documents, including tax invoices, for a period of five years from the end of the reporting period to which they relate, unless a shorter period is specified for a particular tax law. This retention obligation sits alongside, not instead of, the eTIMS transmission requirement: transmitting an invoice to KRA at the point of issue does not relieve the business of its own separate obligation to retain its records for the full five-year period, and a business that treats eTIMS transmission as making its own internal record-keeping redundant is exposed if it is later unable to produce the underlying documentation KRA requests during an audit. Records, books of account, and tax invoices must also be kept in Kenya shillings, with a specific exception for non-resident persons carrying on business through a digital marketplace, who may use convertible foreign currency as approved by the Commissioner.
Practical Compliance Tips
Integrating eTIMS with accounting software as early as possible avoids a common operational trap: manual portal entry does not scale, and a business that starts on the manual portal with the intention of integrating “later” frequently finds the volume of invoices has already outgrown manual entry by the time integration is actually prioritised. All staff responsible for issuing invoices should be trained on the system, since an untrained staff member issuing an invoice outside eTIMS, even unintentionally, creates a non-compliant invoice the business may not discover until a customer queries why their claimed input VAT was rejected. Reconciling eTIMS data with internal accounting records monthly, rather than only at year-end or during an audit, allows discrepancies to be identified and corrected while the underlying transaction is still fresh enough to investigate properly. A business with multiple branches or points of sale should also confirm each location is transmitting correctly, since a single misconfigured till or terminal can quietly generate weeks of non-compliant invoices before anyone notices the gap in the reconciliation.
Penalties for Non-Compliance
KRA can impose penalties for failing to use eTIMS or for issuing invoices outside the system, with the applicable penalty assessed under the Tax Procedures Act’s general penalty framework. Beyond the direct financial penalty, the more commercially significant consequence is often indirect: a non-eTIMS invoice is not valid for VAT input credit purposes, and is frequently challenged for income tax expense deductibility as well, which damages a business’s standing with its own customers and suppliers, since a counterparty that cannot claim input VAT or a deduction against an invoice has a direct commercial reason to take its business to a competitor that issues compliant invoices. For many businesses, this commercial pressure from customers and suppliers, rather than the direct KRA penalty, is what actually drives eTIMS adoption.
eTIMS Kenya KRA compliance has moved from optional to mandatory across the board, and the KRA is actively auditing businesses whose invoicing records do not match the eTIMS database. Non-compliant businesses face penalties under the Tax Procedures Act, 2015 (TPA), including denial of input tax claims and assessment of unpaid tax plus penalties and interest.Clay & Associates Advocates advises businesses on eTIMS compliance obligations under Section 23A of the Tax Procedures Act, record retention requirements, assessing exemption eligibility, and responding to KRA enforcement action over non-compliant invoicing. If you are unsure whether your business is actually caught by the eTIMS requirement, or are weighing which access option fits your invoice volume, we can help you work through the compliance position before a customer dispute or a KRA penalty forces the question.
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For tailored legal advice on this matter, speak with our regulatory and compliance advisory services team at Clay & Associates Advocates. We advise businesses and individuals across Kenya on Regulatory and Compliance Advisory matters from our offices at Nextgen Mall, Nairobi.
