Understanding eTIMS: What Kenyan Business Owners Need to Know

eTIMS in Kenya is the Kenya Revenue Authority‘s electronic platform for generating, transmitting and validating tax invoices. It is often described as a VAT tool that KRA later extended to other businesses, but the legal basis is wider: section 23A(2) of the Tax Procedures Act, 2015 requires “a person who carries on business” to issue an electronic tax invoice through the system established under section 23A(1) and to maintain a record of stocks in it. The section has been amended several times, by Act No. 4 of 2023, Act No. 21 of 2024 and Act No. 9 of 2025. “I am not VAT-registered” is therefore not, on its own, a complete answer to whether eTIMS applies.

eTIMS in Kenya: What It Is

eTIMS transmits invoice data to KRA so that what one business reports as a sale can be cross-referenced against what its counterparty reports as a purchase. Section 23A(2A) prescribes the content of an electronic tax invoice: the words “TAX INVOICE”; the supplier’s name, address and PIN; the purchaser’s name, address and PIN, if any; a serial number; the date and time of issue and, if different, of supply; a description of the supply including quantity or type of service; any discount; the consideration; the tax rate and total tax charged; and any other prescribed information.

Under section 23A(3), where an electronic tax invoice required to ascertain tax liability is issued by a resident person or the permanent establishment of a non-resident, it must be generated through the system. An invoice that bypasses it risks being challenged when the customer claims input VAT or a deduction.

eTIMS in Kenya: Who Must Comply

The obligation in section 23A(2) is not limited to VAT-registered taxpayers. Section 23A(4) allows the electronic tax invoice to exclude certain items, including emoluments, imports, investment allowances, interest, airline passenger ticketing and payment of withholding tax, and section 23A(5) lets the Commissioner exempt a person by Gazette notice. Under section 23A(3A), where a supply is received from a small business or small-scale farmer whose annual turnover does not exceed five million shillings, the purchaser must issue a tax invoice to ascertain tax liability. A business should not assume it is exempt because it is small or informal; if it relies on an exemption, it should be able to point to the specific Gazette notice.

How to Register and Integrate

Registration is done through the business’s KRA iTax account, and KRA offers more than one way to issue eTIMS invoices, ranging from a web portal for low volumes to integration with accounting or point-of-sale software. Confirm the current options in KRA’s own guidance and choose based on actual invoice volume and existing systems. Integrating with accounting software early avoids a common trap: manual entry does not scale, and “later” often arrives after volumes have outgrown it. Train everyone who issues invoices, because an invoice issued outside the system is a non-compliant invoice the business may only discover when a customer’s claim is rejected.

Record Retention

Section 23(1) of the Act requires a person to maintain tax documents in an official language so that tax liability can be readily ascertained, and to retain them for five years from the end of the reporting period to which they relate, or such shorter period as a tax law specifies. Under section 23(2), books of account, records, tax returns and tax invoices must be in Kenya shillings, with an exception in section 23(2A) for a non-resident carrying on business through a digital marketplace, who uses convertible foreign currency approved by the Commissioner. Transmitting an invoice to KRA does not replace the business’s own obligation to retain its records, and a business that cannot produce the underlying documents on audit is exposed.

Practical Compliance Tips

Reconcile eTIMS data with internal accounting records monthly, not only at year-end, so discrepancies can be investigated while the transaction is fresh. A business with several branches or points of sale should confirm each location is transmitting correctly, since one misconfigured terminal can quietly generate weeks of non-compliant invoices.

Penalties for Non-Compliance

Under section 86 of the Act, where the Commissioner determines that a taxpayer has failed to issue an electronic tax invoice, the Commissioner must first issue a written notice requiring reasons. The Commissioner considers whether the failure arose from circumstances beyond the taxpayer’s reasonable control, was not due to wilful neglect or deliberate default, and whether the taxpayer took reasonable steps to comply as soon as practicable. If the Commissioner is not satisfied, the taxpayer is liable to the higher of five per cent of the tax due, or one hundred thousand shillings for a company or ten thousand shillings for an individual. Beyond the penalty, the commercial consequence is often indirect: a counterparty that cannot claim input VAT or a deduction against your invoice has a reason to buy elsewhere.

Frequently asked questions

This article is general information on Kenyan law as at its publication date, not legal advice. Reading it does not create an advocate and client relationship.