If you run a business of any size in Kenya, you’re now part of one of the most significant shifts in tax compliance in recent years: the Electronic Tax Invoice Management System (eTIMS).
What is eTIMS?
Simply put, eTIMS is Kenya Revenue Authority’s digital platform for issuing, managing, and transmitting tax invoices electronically in real time to the tax authority.
eTIMS has several practical goals:
- Automate invoice reporting to KRA.
- Curb tax evasion and reduce leakage in the VAT system.
- Digitalise compliance so data flows straight from businesses into KRA systems without manual submission.
How Does eTIMS Differ from TIMS and ETR?
Unlike the older Tax Invoice Management System (TIMS), which relied heavily on physical Electronic Tax Register (ETR) devices, eTIMS works on computers, laptops, smartphones, tablets and more, and integrates with invoicing systems via API where needed.
This matters now because the legal and operational landscape shifted dramatically in the 2024/2025 financial year. The Finance Act amendments and subsequent public notices made electronic invoicing mandatory for all persons conducting business – not just VAT-registered entities. Expenses must now be supported by an eTIMS invoice to qualify as tax-deductible.
Here are a few facts that show the importance of eTIMS to to KRA and why the taxman is especially keen on its universal adoption:
- eTIMS was initially meant to be mandatory by 31 March 2024, but massive resistance from Kenyan companies saw only 18% of registered taxpayers sign up for eTIMS by the end of August 2024. This prompted KRA to extend the deadline.
- As of 30 September 2025, eTIMS registrations shot to over 500,000 taxpayers, 50% of KRA’s targeted registrations.
- As eTIMS adoption has expanded, average monthly domestic VAT collections rose, showing stronger compliance and reporting reliability.
These figures tell a simple story: eTIMS is no longer optional. It’s becoming the backbone of how Kenya tracks commercial transactions and validates VAT.
What is the official eTIMS adoption deadline?
Based on a KRA public notice dated 7th November 2025, KRA informed taxpayers and the public that effective 1st January 2026, it will begin validating income and expenses declared in tax returns using eTIMS as a primary data source.
From this date business expenditure claimed in tax returns must be supported by an eTIMS-generated invoice or it won’t be deductible for tax purposes.
To clarify: the wording regarding the January 1st compliance date doesn’t dictate a hard deadline, but failure to comply by then carries serious implications:
Invoices that are not generated through eTIMS will no longer be recognised for input VAT or expense claims. In practice, this could raise effective tax costs or reduce tax credits for non-compliant businesses.
Here’s a practical example: Say you paid a supplier Ksh 500,000 for inventory without an eTIMS-compliant invoice. KRA will disregard the charge and consider the amount as profit, meaning you’ll pay Ksh 150,000 in corporate income tax on that transaction. You’ll effectively be paying taxes on expenses you already incurred.
Here’s the bottom line: eTIMS compliance isn’t negotiable for B2B operations for expense deductibility. Even if you’re late, you need to be onboarded and issue compliant invoices immediately to avoid downstream losses.
Who needs to comply with eTIMS?
Originally, only VAT-registered businesses were required to use electronic invoicing systems like TIMS and now eTIMS. That’s no longer the case.
Starting 31st December, fuel stations across Kenya will be required to issue eTIMS-compliant receipts.
— KRA Care (@KRACare) December 19, 2025
These receipts help you track your expenses and help build the nation.
Every litre counts. Every receipt matters.
Click the link: https://t.co/90EhtDAw2O to learn how to… pic.twitter.com/RXfbwyCFjT
Under the current regulatory framework the following entities need to register for and use eTIMS when invoicing:
- VAT-registered entities: corporates, SMEs, and consultants generating taxable supplies.
- Non-VAT entities issuing invoices for goods or services that are claimed for business expenses.
- Freelancers and gig-economy professionals who supply services to corporates or SMEs and need invoices recognised for tax purposes.
- Suppliers across a value chain: even micro-suppliers whose invoices affect a buyer’s ability to claim input VAT.
- Anyone whose invoices must be recognised for tax deduction or VAT claim purposes will ultimately fall under eTIMS requirements.
In short, if you issue invoices and those invoices matter for tax deductions or VAT credits, you must be on eTIMS. The old exceptions for smaller traders have largely been removed or tightened in 2025, making compliance broad and practically universal.
How does the eTIMS registration process work today?
In a bid to ease eTIMS registration, KRA has introduced several initiatives, offering automated routes that no longer require prior approval from a KRA officer.
These options include:
- eTIMS Lite (USSD): For individuals and sole proprietors, accessible by dialing *222# on any mobile phone, no internet required.
- eTIMS Lite (Web): A web-based solution accessible via the eCitizen platform for businesses with minimal transactions.
- eTIMS Lite (Mobile App): An app available on app stores for use on smartphones and tablets.
- Online Portal: A web portal for service-only businesses.
- eTIMS Client: Downloadable software for Windows or Android for businesses dealing with goods and services, supporting multiple branches.
Common delay points during the registration process include mismatched KRA records (contacts, PIN details), data entry errors at sign-up, or choosing an integration path that doesn’t match your current invoicing system.
This video will take you through the step-by-step process of registering for eTIMS:
What does eTIMS compliance actually mean for daily operations?
Compliance affects invoicing workflows more than tax returns:
- You must issue tax invoices that meet eTIMS requirements complete with mandatory fields, QR codes, unique identifiers, and electronic transmission to KRA.
- Invoices are transmitted automatically to KRA in real time or near real time, ensuring your sales figures are visible before returns are filed.
- Clients can only claim input VAT against invoices generated via eTIMS. If your invoice isn’t compliant, their VAT credit may be denied.
- Businesses need to keep accurate records and be ready for audits where KRA checks invoice issuance, transmission logs, and returns.
- What was once voluntary is now mandatory: if you issue invoices that matter to someone’s tax deduction, they must come from eTIMS. Non-eTIMS invoices risk being disregarded in deductions.
This section of operational change is where business owners feel the shift most; even if it’s just training finance teams or updating point-of-sale systems.
How are Businesses Responding to the eTIMS Compliance Push?
SMEs and Freelancers
Remember:
- SMEs contribute significantly to Kenya’s economy, with the sector accounting for over 30% of Kenya’s GDP. This means that millions of small businesses will need to adjust their processes to stay compliant. This is a massive base that KRA aims to capture.
- As of April 2025, there were over 1.2 million freelancers in Kenya working across various sectors, many of whom are affected by this shift.
If you are a SME or freelancer supplying goods or services to a larger company, you may already have received notifications from your clients informing you to ensure your invoices are eTIMS-compliant. This tells you how important eTIMS compliance is, as without valid eTIMS invoices, your clients might not accept your invoices, which in turn will disrupt your business operations.
READ ON: 6 Crucial Things Every Business Leader Should Know About SME Taxation in Kenya
Corporates and Large Organizations
For corporates in Kenya, the adoption of eTIMS is not just a compliance issue, it’s a business necessity. Large companies rely on their suppliers to issue invoices that can be processed smoothly for tax purposes. If a supplier’s invoice isn’t compliant with eTIMS, it means the corporate client cannot claim back VAT on that invoice or recognize it as an expense, which results in decreased profits.
Because of this, many large companies are now demanding that their suppliers switch to eTIMS.
This has also brought about some supply chain pressure. Even if a supplier they’ve maintained for a long time is cheap, the tax implications of lacking an eTIMS invoice are so dire that some companies consider it less risky to use a pricier but compliant supplier.
What steps should businesses take now to ensure full eTIMS compliance?
Here’s a checklist to help you prepare for the eTIMS transition:
- Conduct an internal readiness audit: Check if your invoicing system is eTIMS-ready. If you’re using a manual system or outdated software, it’s time to update.
- Confirm supplier readiness: Inform all your suppliers that all invoices issued to your business going forward should be eTIMS-compliant.
- Train staff: Ensure that the team responsible for invoicing is familiar with the eTIMS process. Offer training sessions to avoid costly mistakes down the line.
- Test integrations: If your business uses an ERP, POS system, or accounting software, ensure that these systems can integrate with eTIMS. Test the system to iron out any technical issues.
- Prepare a fallback plan: For smaller businesses or those without advanced systems, consider using the eTIMS Lite solution or eCitizen channel, which allows businesses to generate compliant invoices without complex tech setups.
Are you ready for the shift?
The shift to eTIMS is here to stay. The financial and operational implications are significant, and businesses that delay or ignore these changes risk facing severe consequences: from penalties to audit exposure.
If you haven’t yet registered, take action today. Ensure your invoicing systems are ready, your teams are trained, and your suppliers are compliant. And if you need help with any tax matters, our experienced team of tax consultants at Alphacap is ready to lend you a helping hand.