Kenya
eTIMS compliant accounting and ERP software for Kenya
eTIMS is not optional and it is not only about VAT: from 2024, business expenses without an eTIMS invoice are disallowed for income tax. Issue, transmit and reconcile from one system.
Compliance summary
Mandatory now- Tax authority
- Kenya Revenue Authority (KRA)
- E-invoicing
- Mandatory — eTIMS, for all persons in business including non-VAT-registered
- VAT rate
- 16%
- Currency
- KES
Last reviewed . Rates and deadlines change — confirm the current position with the authority above before you act on it.
What your invoice must carry
What eTIMS requires before an invoice counts
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Transmission with the control code
Every invoice is generated, signed and transmitted to KRA, and carries the resulting control code and QR. Credit notes and returns travel the same path.
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Your buyer's deduction depends on it
Expenditure not supported by an eTIMS invoice is disallowed for income tax, and a VAT-registered buyer cannot claim input VAT without one. Your invoice is your customer's deduction.
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Withholding VAT at 2%
Appointed agents deduct 2% VAT at source. The supplier has to carry those credits against output VAT and reconcile the certificates — a ledger most systems simply do not keep.
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Kenyan statutory payroll
PAYE bands with SHIF, NSSF Tier I and II and the housing levy — several of which are deducted before PAYE is computed, so the order of operations is itself a compliance question.
The argument is deductibility, not the fine
Most e-invoicing regimes lean on penalties. Kenya did something sharper: it tied the deductibility of business expenditure to whether an eTIMS invoice supports it. From January 2024 an expense without one is disallowed for income tax.
That changes who is pushing. Your customers need compliant invoices from you in order to deduct what they spend, so pressure arrives from the market as much as from the authority.
Matching got stricter
From January 2026, KRA validates declared income and expenses line by line against the invoices suppliers actually transmitted. Claims that do not match a transmitted invoice are disallowed.
Reconciliation therefore stops being an internal tidiness exercise and becomes the thing that determines your taxable profit. It wants a system where the invoice, the ledger entry and the transmission are the same event rather than three records to align later.
It reaches businesses that are not VAT-registered
The obligation covers all persons carrying on business, not only VAT-registered ones — including schools, hospitals and NGOs. Simplified onboarding routes exist for small taxpayers, and buyer-initiated invoicing covers some below the registration threshold.
If you have been treating this as a large-company problem, that is the assumption worth checking first.
Common questions
Is eTIMS mandatory in Kenya?
Yes, and its reach is wider than most people assume: the obligation covers all persons carrying on business, not only VAT-registered ones — including schools, hospitals and NGOs. Simplified onboarding routes exist for small taxpayers, and buyer-initiated invoicing covers some below the registration threshold.
What happens if an expense has no eTIMS invoice?
From January 2024, expenditure not supported by an eTIMS invoice is disallowed for income tax, and a VAT-registered buyer cannot claim input VAT without one. That means your invoice is your customer's deduction, so commercial pressure arrives from the market as much as from the authority.
What does eTIMS require of an invoice?
Every invoice is generated, signed and transmitted to the Kenya Revenue Authority, and carries the resulting control code and QR code. Credit notes and returns travel the same path rather than being handled outside the system.
How does withholding VAT work in Kenya?
Appointed agents deduct 2% VAT at source. The supplier then has to carry those credits against output VAT and reconcile the certificates — a ledger most systems simply do not keep, which is why the reconciliation ends up in a spreadsheet.
What changed for Kenyan taxpayers in 2026?
From January 2026 the KRA validates declared income and expenses line by line against the invoices suppliers actually transmitted, and claims that do not match a transmitted invoice are disallowed. Reconciliation therefore stops being an internal tidiness exercise and becomes the thing that determines your taxable profit.
Rates, regimes and deadlines in this summary change, and many countries are actively legislating on e-invoicing. This is general information, not tax or legal advice — confirm the current position with the authority named above or with your tax adviser before you rely on it.
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