As part of efforts to strengthen tax compliance and improve transparency, the Kenya Revenue Authority (KRA) has made it mandatory for most businesses in Kenya to adopt the Electronic Tax Invoice Management System (eTIMS).
The requirement is broad and affects nearly every person or entity engaged in business—whether large or small, formal or informal.
Who Must Use eTIMS?
Under Kenyan tax regulations, anyone carrying out business activities is required to use eTIMS, regardless of whether they are registered for Value Added Tax (VAT) or not.
This includes:
1. Individuals and Sole Proprietors
Self-employed individuals such as consultants, lawyers, doctors, freelancers, and digital content creators must use eTIMS. Even small-scale operators in the informal “Jua Kali” sector fall under this category.
2. Companies and Partnerships
All registered businesses, including limited companies and partnerships, are required to onboard to eTIMS. This applies across all industries, from retail and manufacturing to services.
3. Informal Sector Traders
Small traders and businesses operating without formal structures are not exempt. As long as they are engaged in buying and selling goods or services, they must comply.
4. Non-VAT Registered Businesses
Even if your business does not charge VAT—such as schools, hospitals, and NGOs—you are still required to use eTIMS if you issue invoices for goods or services.
5. Specific Tax Categories
Businesses paying Turnover Tax (TOT) or Monthly Rental Income (MRI) tax must also adopt eTIMS as part of their compliance obligations.
Why Is eTIMS Mandatory for All Businesses?
The government has enforced eTIMS widely for two key reasons:
1. Expense Verification and Tax Deductions
From January 1, 2024, any business expense that is not supported by an eTIMS-generated invoice is not considered valid for tax deductions. This means businesses risk higher tax liabilities if they fail to comply.
2. Tax Compliance Certificate (TCC) Requirement
Being registered on eTIMS is now a key condition for obtaining a Tax Compliance Certificate. Without it, businesses may struggle to access government tenders, contracts, or financial services.
Are There Any Exceptions?
While most businesses must be onboarded, certain transactions do not require eTIMS invoices. These include:
- Salaries and wages (handled through PAYE systems)
- Imports (covered under customs processes)
- Financial services such as bank interest and fees
- Airline ticketing and related travel services
Additionally, for suppliers with annual turnover below KSh 5 million, buyers may generate invoices on their behalf using a buyer-initiated system.
What This Means for Businesses
The wide scope of eTIMS means that compliance is no longer optional. Whether you run a large company or a small roadside business, you are expected to issue electronic invoices through the system.
Failure to adopt eTIMS can lead to penalties, missed tax benefits, and operational challenges, especially when dealing with compliant partners.
