The Kenya Revenue Authority (KRA) recently made an important announcement: all businesses in Kenya, regardless of their size or VAT registration status, are now required to use the Electronic Tax Invoice Management System (eTIMS). This means that the previous exemption for small businesses with an annual turnover of KES 5 million or less has been removed.

This update marks a significant shift for many micro and small enterprises across Kenya, and it’s essential to understand what it means for daily operations, tax compliance in Kenya, and eligibility for claiming business expenses.

Why eTIMS is Crucial for Tax Compliance in Kenya

eTIMS is a digital invoicing system developed by the Kenya Revenue Authority to streamline how Kenyan businesses generate and submit tax invoices. The system aims to create a transparent, real-time environment for transaction tracking, reduce tax evasion, and improve overall revenue collection efficiency.

For the KRA, eTIMS allows for real-time access to transaction data, making it easier to monitor compliance from businesses across all counties, including major commercial hubs like Nairobi, Mombasa, Kisumu, Nakuru, and others.

What Led to the Mandatory Use of eTIMS?

Initially, small businesses in Kenya were exempted from using eTIMS to allow for a smooth transition into the digital tax environment. However, the KRA’s tax policy in 2025 now seeks to ensure that all business transactions in Kenya, regardless of business size, are properly documented through eTIMS. This change is part of a broader effort to expand the tax net and enhance fiscal transparency.

How KRA’s eTIMS Requirement Affects Small Businesses in Kenya

If your business previously benefited from the exemption, you now need to register for eTIMS and start issuing compliant invoices. Fortunately, the KRA has rolled out simplified solutions specifically for non-VAT registered businesses in Kenya, including micro and small enterprises:

• eTIMS Lite Web: A web-based invoicing platform accessible via the eCitizen portal, ideal for businesses with computer and internet access.

• eTIMS Lite USSD: Allows users to generate tax invoices directly from their mobile phones—perfect for rural areas and businesses in regions with limited internet connectivity.

• eTIMS Lite Mobile App: Available for download on the Google Play Store and Apple Store, this app offers a mobile-first invoicing experience.

• Buyer-Initiated Invoicing: For very small or individual sellers in Kenya with a turnover of KES 5 million or less, a buyer (if also a registered business) can generate the invoice on your behalf via the eCitizen platform, with your consent.

Crucial Tax Implications for Kenyan Businesses

The most important takeaway for small businesses is this: all business expenses you wish to claim for tax purposes must now be supported by an eTIMS-compliant electronic tax invoice.

If your suppliers—whether in Nairobi, Machakos, or Eldoret—are not issuing KRA-approved eTIMS invoices, you may not be able to claim those expenses during your income tax return filing in Kenya. Similarly, if your business does not issue eTIMS invoices, your customers may lose out on tax deductions, which could affect your business relationships.

How to Get Started with eTIMS in Kenya

The KRA has simplified the eTIMS onboarding process to make it accessible to all Kenyan business owners. You can register through the KRA website or the eCitizen platform, both of which provide step-by-step guides for different versions of eTIMS. Self-registration is available for most users, and additional support is provided via KRA call centers and regional offices countrywide.

This mandatory rollout reinforces the KRA’s commitment to digitizing tax processes in Kenya and making compliance more structured and traceable. While it may initially feel like an additional step, adopting eTIMS will help your business maintain clean records, simplify your Kenya income tax filing, and stay aligned with evolving tax laws in Kenya.

Unsure how to get started or what this means for your specific business? Don’t hesitate to reach out to us for guidance and support.

Call us on: 0739841333

or

Email us through: Info@eliteaccounting.co.ke