Let us tell you about a conversation we have been having a lot lately.
A client calls. Business is going well — sales are up, the team is growing, and they just renewed a supply contract with a major corporate. Then, almost as an afterthought, they ask: “By the way, we’ve been hearing something about eTIMS. Do we need to worry about it?“
The short answer? Yes. The longer answer is what this post is about.
So, What Exactly Is eTIMS?
eTIMS stands for the Electronic Tax Invoice Management System — KRA’s digital invoicing platform that replaces the old physical ETR machines most businesses were used to. Under eTIMS, every tax invoice your business issues must be transmitted to KRA in real time (or near real time), carrying a unique QR code, your PIN, the buyer’s PIN where applicable, and a full breakdown of amounts and tax.
Think of it as KRA quietly sitting in on every single sale your business makes. Friendly? Debatable. Here to stay? Absolutely.
Why 2026 Changed Everything
Here is where things get serious. As of 1st January 2026, KRA is no longer just collecting invoice data — it is validating your tax returns against it.
What does that mean in plain language? If you declare an expense on your income tax return but there is no matching eTIMS invoice sitting in KRA’s system, that expense gets rejected. Disallowed. Gone. And a disallowed expense means a higher taxable income, which means a bigger tax bill than you budgeted for.
We have already seen this play out with pre-populated Corporate Income Tax returns for the 2025 financial year — the iTax portal is limiting deductible expenses to those captured through eTIMS. This is not a warning shot. The gun has already fired.
“But We’re Compliant — We File Everything On Time”
We hear this one constantly, and we always have the same gentle response: filing on time and being actually compliant are two very different things right now.
The numbers tell the story. By late 2025, over 500,000 taxpayers had onboarded to eTIMS — which sounds impressive until you learn that only about 49% of those registered users are actively transmitting invoices. That means roughly half the businesses that signed up are technically on the system but still operating like it does not exist.
In our experience working with clients across industries, the gap is usually not malice or avoidance. It is confusion. People signed up, got their login credentials, and then were not sure what to do next. Sound familiar? You are not alone.
The Part That Catches Even Careful Businesses Off Guard
Here is what most people do not realise until it is too late: eTIMS is not just about the invoices you issue. It is also about the invoices you receive.
If your supplier sells you Ksh 500,000 worth of goods but they are not on eTIMS, or they are on eTIMS but have not transmitted that invoice correctly, your expense claim for that purchase is at risk. You are now dependent on your suppliers’ compliance, not just your own.
We always advise our clients to audit their supplier base as urgently as they audit their own systems. Ask the question: is every vendor on your approved supplier list eTIMS-compliant? If you do not know the answer, that is the first thing to fix.
The Practical Checklist We Walk Our Clients Through
When we onboard a client for eTIMS compliance support, we work through five immediate priorities:
- Confirm you are registered — and actually transmitting. Registration without transmission is like buying a gym membership and never going. KRA can see both.
- Audit your invoice content. Every eTIMS invoice must carry the seller’s PIN, the buyer’s PIN (where applicable), a QR code, unique identifiers, item detail, and correct tax amounts. Missing fields = rejected invoice.
- Map your supplier chain. Get written confirmation from key suppliers that their invoices will be eTIMS-compliant. Build this into your procurement process going forward.
- Integrate or update your accounting software. Manual eTIMS logging is a nightmare at scale. If your current system cannot interface with eTIMS via API, it is time to have that conversation with your bookkeeper or accountant.
- Plan for the 2025 tax return filing season. The first full filing season under the new validation rules is here. If you have undocumented expenses for 2025, the time to sort them out is now, not during filing.
What Happens If You Don’t Act?
The consequences are straightforward and painful: disallowed expenses, increased tax liability, potential penalties, and a much higher chance of being flagged for a full audit. KRA’s systems are now algorithmically cross-referencing declared income against digital transaction records at a scale that simply was not possible before.
The era of “we’ll sort it during filing” is over. The data already exists before you file.
One More Thing Worth Knowing
If you are a smaller business or freelancer supplying goods or services to a larger corporate, there is a very good chance you have already received a notice from your client asking you to ensure your invoices are eTIMS-compliant. That client is protecting their own deductibility. If you cannot comply, some businesses are moving to suppliers who can.
Compliance is no longer just about your relationship with KRA — it is becoming a factor in your relationship with your customers.
We Can Help
At Taxmart Kenya, we have been supporting businesses through this transition since eTIMS became mandatory. Whether you are starting from scratch, trying to understand why your invoices are bouncing, or just want someone to walk you through the whole system without the jargon, our tax consulting team is here for exactly that.
If you would like to understand where your business currently stands on eTIMS compliance — including any exposure from the 2025 return filing season — book a free consultation with us. No pressure, no jargon, just clarity.
