What is eTIMS and Who Needs It?

eTIMS (Electronic Tax Invoice Management System) is KRA's digital invoicing system that tracks all business transactions in real time. Think of it as KRA's way of connecting every sale and purchase in Kenya so that tax reporting becomes automatic and verifiable — and so that tax cheating becomes much harder.

If you run any kind of business in Kenya — a shop, a salon, a catering operation, a consultancy, or rental property — eTIMS affects you directly. This guide explains exactly what it is, who needs it, and what you need to do right now.

The History Behind eTIMS — Why KRA Built It

For decades, Kenya's VAT and income tax system relied on self-reporting: businesses declared their income and expenses, and KRA generally had to trust those declarations. The result was a significant tax gap — the difference between what businesses owed and what they actually paid.

KRA began piloting electronic tax invoice systems in 2021, first for large businesses. By 2023, all VAT-registered businesses were required to use eTIMS. In 2024, KRA expanded the mandate to all businesses — VAT-registered or not — that want to claim expense deductions. The January 2026 milestone is when the enforcement became automatic: KRA now validates your declared expenses against the eTIMS database when you file your return.

Why This Matters From January 2026

From 1 January 2026, KRA validates every expense declared on tax returns against eTIMS data at the point of filing. If a business expense does not have a matching eTIMS invoice, KRA may disallow it — meaning you lose the tax deduction and pay more tax on that amount.

This is a fundamental change from previous years, when you could claim expenses based on paper receipts or internal records. Now, the invoice must exist in KRA's eTIMS database at the time you claim it. There is no grace period, no appeal on this point — the data either matches or it does not.

Here is a concrete example of the financial impact: If your business spent KES 2 million on stock and operating expenses in the year, but your suppliers did not issue eTIMS invoices, KRA adds those KES 2 million back to your taxable income. At Kenya's 30% corporate tax rate, that is an extra KES 600,000 in tax on money you genuinely spent — and for which you have nothing to show KRA.

Who Needs eTIMS in Kenya?

Every business in Kenya, regardless of size or sector. This includes:

• VAT-registered businesses — mandatory since 2023. If your annual turnover exceeds KES 5 million, you must be both VAT-registered and eTIMS-compliant.
• Non-VAT businesses issuing invoices — if you invoice clients for any service or product, you need eTIMS invoices to support those income declarations.
• Businesses claiming deductible expenses — any business claiming expense deductions on their income tax return must hold eTIMS invoices for those expenses.
• Freelancers and sole traders — consultants, graphic designers, event planners, driving instructors — all need to issue eTIMS invoices to clients.
• Landlords with commercial tenants — commercial rent is subject to VAT if the landlord is VAT-registered, so eTIMS invoices are required.
• Suppliers in any business value chain — if your customer is a business that will claim your invoice as a deductible expense, they need your eTIMS invoice. Without it, they pay more tax — and many buyers now refuse to work with suppliers who cannot issue eTIMS invoices.

There is one important exclusion: residential landlords collecting rent from tenants fall under the MRI (Monthly Residential Income) regime, which is managed separately through iTax. They do not issue VAT invoices for rent. However, they may still need to issue income receipts through eTIMS to back up their income declarations.

What an eTIMS Invoice Contains

A valid eTIMS invoice is fundamentally different from a paper receipt or a PDF you created in Word. It must include:

• Your KRA PIN — the seller's unique identifier
• The buyer's KRA PIN — required for B2B transactions where the buyer will claim the expense as a deduction
• A KRA-generated invoice number — assigned by KRA's system, not by you
• Invoice date and time — registered in real time in KRA's database
• Line items with VAT treatment — standard (16%), zero-rated, or exempt, for each item
• A QR code — that buyers can scan to verify the invoice in KRA's system

A paper receipt, a PDF, or a regular Excel invoice — even if professionally designed — is not an eTIMS invoice. It cannot be used to support an expense deduction claim from January 2026 onward.

How to Access eTIMS — All Available Channels

KRA provides several free ways to generate and receive eTIMS invoices:

• KRA eTIMS portal — etims.kra.go.ke — the main web-based platform. You log in, enter invoice details one by one, and download the resulting eTIMS invoice. Best for businesses with a small number of transactions per month.
• eTIMS mobile app — available on Android and iOS. Useful for field invoicing — you can create an invoice while at the client's premises using your phone.
• KRA Shuru WhatsApp bot — send a message to 0711 099 999. The bot guides you through creating one invoice at a time via WhatsApp. Free and accessible even on basic smartphones. Good for very low-volume businesses.
• USSD *222# — for businesses without reliable internet access. Works on any mobile phone. Suitable for simple, single-item transactions.
• eTIMS API — for large businesses that want to integrate eTIMS directly into their existing ERP or accounting software. Requires OSCU certification and technical development.
• Third-party certified tools like KompliTax — these integrate with KRA's system and automate the invoice creation process, often pulling data from M-Pesa transactions and using AI to categorize and generate bulk invoices. Ideal for businesses with dozens or hundreds of transactions per month.

Understanding OSCU Certification

You may have heard the term OSCU (Online Sales Control Unit) in relation to eTIMS. An OSCU is a software certification from KRA that allows third-party systems to generate eTIMS invoices directly, without the user logging into the KRA portal each time.

Third-party software providers — including KompliTax — go through a KRA certification process to become approved OSCU partners. This means their invoices are legally equivalent to invoices generated on the KRA portal itself. When choosing a third-party eTIMS tool, confirm it is OSCU-certified by KRA. Tools that are not certified cannot legally issue eTIMS invoices on your behalf.

How to Register for eTIMS — Step by Step

1. Log in to iTax — go to itax.kra.go.ke with your KRA PIN and password.
2. Navigate to the eTIMS tab — visible in the main menu once logged in.
3. Select "Register Device" or "Virtual OSCU" — for most small businesses, the Virtual OSCU (software-only option) is appropriate. You do not need any hardware.
4. Complete the registration form — provide your business name, contact details, and the type of invoicing you do (goods, services, or both).
5. Receive your eTIMS credentials — KRA will send you a username and password for etims.kra.go.ke, usually within 24–48 hours.
6. Log in to etims.kra.go.ke and test by creating a sample invoice.

If you use a third-party tool like KompliTax, registration happens within the platform — you provide your KRA PIN and the tool handles the connection to KRA's eTIMS system on your behalf.

What Happens During a KRA eTIMS Audit

KRA can conduct an audit of your eTIMS compliance at any time. An audit typically involves:

• Comparison of your declared income versus eTIMS invoice totals registered under your PIN
• Comparison of your declared expenses versus eTIMS invoices issued to you by your suppliers
• Review of VAT returns to ensure output and input VAT figures are consistent with eTIMS data

If the numbers do not match, KRA will issue an assessment for the additional tax owed, plus penalties (5–25% of the tax owed depending on the violation type) and interest at 2% per month. Audits can cover up to 5 years of prior returns.

Frequently Asked Questions

Is eTIMS the same as e-filing?

No. e-filing refers to submitting your tax returns (VAT, income tax) online through iTax. eTIMS refers specifically to the electronic invoicing system that records your sales transactions. Both are required: eTIMS captures your transactions in real time; iTax is where you file your periodic returns summarizing those transactions.

My business is very small. Do I still need eTIMS?

If you issue any invoices to clients or claim any business expenses on your tax return — yes. There is no minimum turnover exemption for eTIMS. However, very small businesses with only a few transactions per month can use the free Shuru WhatsApp bot or the free KRA mobile app without any cost.

Can I backdate eTIMS invoices for old transactions?

KRA's system allows some backdating, but there are limits. You cannot generate an eTIMS invoice for a transaction that occurred years ago and expect KRA to accept it as a legitimate business expense. Focus on getting compliant from today forward. For prior years where you cannot produce eTIMS invoices, speak to a tax professional about how to handle the declarations correctly.

What is the penalty if I generate invoices but not through eTIMS?

If you issue paper receipts or non-eTIMS invoices, the expense claims based on those invoices may be disallowed, as described above. Additionally, VAT-registered businesses that fail to use eTIMS face specific enforcement actions from KRA, including suspension of their VAT registration and potential criminal charges for systematic tax evasion.