KRA's enforcement of eTIMS compliance has moved beyond warnings. From 2026, non-compliance has direct financial consequences every time you file a tax return.
Expense Disallowance
This is the biggest financial risk. When you file your income tax return, KRA now cross-checks your declared expenses against eTIMS records. Any expense that doesn't have a matching eTIMS invoice gets disallowed — added back to your taxable income.
Example: Your business spent KES 3 million on stock and operating expenses in 2025. Without eTIMS invoices from your suppliers, KRA disallows these deductions. Your taxable income increases by KES 3 million. At 30% corporate tax rate, you owe an extra KES 900,000 in tax on money you actually spent.
Late Filing Penalties
- VAT returns — KES 10,000 or 5% of the tax due (whichever is higher)
- Income tax returns — KES 20,000 or 5% of the tax due (whichever is higher)
- Interest on late payment — 2% per month on unpaid tax amounts, compounding monthly
Audit Risk
Businesses with low eTIMS compliance or mismatches between declared income/expenses and eTIMS data are at higher risk of being selected for a KRA audit. Audits can cover the past 5–7 years of returns and result in additional tax, penalties, and interest.
Supply Chain Pressure
If your customers are VAT-registered businesses, they need eTIMS invoices from you to claim their input VAT deductions. Businesses that don't issue eTIMS invoices are increasingly being dropped as suppliers because they create a tax liability for their buyers.
What You Should Do Now
- Start generating eTIMS invoices for all your sales immediately — even if retrospectively for 2025 transactions
- Request eTIMS invoices from all your suppliers — especially for significant expense categories
- Use KompliTax to track your compliance score and identify gaps before you file your return
- If you have outstanding unfiled returns, file them now — penalties increase the longer you wait