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In 2023, the Kenya Revenue Authority (KRA) implemented the Electronic Tax Invoice Management System (eTIMS).

This digital framework updated the previous Tax Invoice Management System (TIMS) by making it mandatory for businesses, including those not registered for Value Added Tax (VAT), to electronically generate and transmit tax invoices to the KRA.

The system is part of a broader effort by the Kenyan government to digitize tax administration and ensure real-time monitoring of business transactions.

eTIMS is a software-based solution designed to facilitate the issuance of electronic tax invoices. Unlike the previous system, which relied heavily on physical Electronic Tax Register (ETR) hardware, eTIMS allows for invoice generation through various digital platforms. This integration is intended to improve the accuracy of tax declarations and simplify the reconciliation process for taxpayers.

To accommodate different business scales and technical capabilities, the KRA provides several versions of the system:

  • eTIMS Lite (USSD) – Accessed through the short code *222#. This solution is for individuals and sole proprietors.
  • eTIMS Lite (Mobile app) – accessible on Google Play Store and Apple Store.
  • eTIMS Taxpayer Portal: A web-based interface for managing accounts and monitoring transaction history.
  • eTIMS Client: A downloadable desktop application for businesses that prefer offline functionality for invoice preparation before syncing with KRA servers.
  • VSCU and OSCU: Virtual and Online Sales Control Units intended for large businesses with high transaction volumes. These solutions allow for integration with existing Enterprise Resource Planning (ERP) or point-of-sale systems.

A critical update to the eTIMS framework involves the mandatory validation of tax returns. Effective 1st January 2026, the KRA will begin validating income and expenses declared in both individual and non-individual income tax returns.

This validation process will apply to the 2025 year of income (or corresponding accounting period) and will cross-reference taxpayer returns against several data sources, including:

  • TIMS/eTIMS data: Records of electronic invoices transmitted.
  • Withholding Income Tax: Data on gross payments and taxes withheld.
  • Customs Records: Official data on import transactions.

Under these regulations, all declared income and expenses must be supported by a valid electronic tax invoice that has been correctly transmitted to the KRA. It is essential that the buyer’s PIN is included on the invoice where applicable. This requirement is subject to specific exceptions provided under Section 23A of the Tax Procedures Act and the Tax Procedures (Electronic Tax Invoice) Regulations, 2024.

The transition to eTIMS and the subsequent validation measures introduce several changes to business operations in Kenya:

  1. Compliance Requirements: All persons carrying on business in Kenya are required to onboard the system. Documentation generated through eTIMS is necessary for the validation of business expenses for income tax purposes.
  2. Cost Structure: The eTIMS software is provided by the KRA at no cost to the user, potentially reducing the need for businesses to purchase specialized hardware.
  3. Data Transmission: Invoices are transmitted to KRA systems in real-time or near real-time. Each invoice includes a unique QR code that allows for verification of the document’s authenticity.
  4. Record Management: The system centralizes electronic records, which may assist businesses in maintaining digital trails for audit and filing purposes. Taxpayers are encouraged to request eTIMS schedules of their annual income and expenses from their designated account managers to ensure accuracy before filing.

The eTIMS onboarding process

To register for eTIMS, taxpayers must access the official eTIMS portal using their KRA PIN. The process involves:

  • Verification: Identity is confirmed through a One-Time Password (OTP) sent to the user’s registered mobile number.
  • Solution Selection: Users choose the specific software version that fits their business model.
  • Documentation: Depending on the business structure (sole proprietorship, partnership, or limited company), users must upload relevant identification and registration documents for approval.