What Is eTIMS and Why Every Kenyan Business Needs to Know About It

If you run a business in Kenya, big or small, VAT-registered or not, you’ve probably heard the word “eTIMS” thrown around by your accountant, your landlord, or even the supplier who suddenly started asking for your KRA PIN before selling to you.

It’s not a passing trend. It’s now one of the most important compliance requirements for doing business in Kenya, and getting it wrong can cost you real money.

This guide breaks down exactly what eTIMS is, who has to use it, the key deadlines you need to know, and what happens if you ignore it.

What Is eTIMS?

eTIMS stands for electronic Tax Invoice Management System. It’s a digital invoicing platform built by the Kenya Revenue Authority (KRA) that lets businesses generate, transmit, and store tax invoices electronically, in real time.

Every time a compliant business makes a sale, it issues an invoice through eTIMS. That invoice is sent to the buyer and, at the same time, transmitted straight to KRA’s systems.

There’s no more waiting for month-end reconciliation or hoping a paper receipt doesn’t get lost; KRA sees the transaction as it happens.

eTIMS replaced the older ETR (Electronic Tax Register) machines and the original TIMS system, and it’s accessible on almost any device, including computers, phones, and tablets, not just dedicated hardware.

That flexibility is intentional: KRA designed it so that everyone from a large retailer to a one-person consultancy can onboard.

Why does eTIMS exist? Kenya has historically lost significant revenue to under-reported sales and inflated expense claims.

By requiring every transaction to be logged electronically and in real time, KRA closes the gap between what businesses say they earned or spent and what actually happened on the ground.

Who Does KRA Require to Comply?

This is where most business owners get caught out. The common misconception is: “I’m not VAT-registered, so eTIMS doesn’t apply to me.” That was true under the old TIMS/ETR system; it has not been true since January 2024.

Under the Tax Procedures (Electronic Tax Invoice) Regulations, every person carrying on business in Kenya is required to onboard eTIMS and issue electronic invoices. In practice, that includes:

Sole proprietors and self-employed traders, VAT-registered or not
Partnerships and limited liability partnerships
Private and public limited companies
Cooperatives and SACCOs engaged in business activity
NGOs and non-profits, for any business income they earn
Foreign businesses with a taxable presence in Kenya
Informal-sector traders who sell to formal-sector buyers

Even businesses that only sell VAT-exempt goods or services, such as hospitals, schools, and tour operators, are required to onboard, because eTIMS is now tied to income tax deductions, not just VAT.

What about very small suppliers? KRA recognised that forcing every small trader to register individually wasn’t practical.

So there’s a buyer-initiated invoicing mechanism: if a registered business buys from a supplier whose annual turnover is under KES 5 million and who isn’t on eTIMS, the buyer can generate a self-billed eTIMS invoice on the supplier’s behalf.

This keeps small suppliers commercially viable while still giving the buyer a valid invoice to claim as a deductible expense.

A Few Genuine Exemptions

Not everything needs an eTIMS invoice. The regulations carve out specific exclusions, including:

Salaries, wages, and other pay-as-you-earn (PAYE) emoluments
Imported goods, handled through customs processes
Airline passenger ticketing
Interest income and bank charges
Expenses already subject to a final withholding tax
Services supplied by a non-resident with no permanent establishment in Kenya

If you’re not sure whether your activity falls under an exemption, the safer assumption is that it doesn’t.

Treating yourself as exempt when you’re not is the costlier mistake, since it leaves your buyers unable to claim the expense and exposes you to penalties.

Key Deadlines You Should Know

eTIMS didn’t arrive overnight; it’s been rolled out in stages:

September 2023: eTIMS became effective for taxpayers generally, building on the earlier TIMS/ETR system.
January 1, 2024: The mandate expanded to cover every business in Kenya, VAT-registered or not. From this date, any business expense without a valid eTIMS invoice became non-deductible for income tax purposes.
March 31, 2024: The extended onboarding window closed for non-VAT registered taxpayers, who had been given grace to migrate onto the system and backdate manually issued invoices.
January 1, 2026: KRA activated its Income and Expense Validation Engine, which automatically cross-checks every income and expense entry declared in a tax return against eTIMS/TIMS data, withholding tax records, and customs import records, in real time.

That last point is the big shift for 2026. Compliance checks used to be something that happened occasionally, during an audit. Now, mismatches between your filed return and your eTIMS transaction history are flagged automatically every time you file.

What Non-Compliance Actually Costs

There are three distinct costs to staying outside eTIMS, and most business owners only think about the first one.

1. Direct penalties.

Under the Tax Procedures Act, failure to issue a required electronic tax invoice can attract a monetary penalty.

Following the Finance Act 2025 amendments, the penalty for non-compliance with e-TIMS is double the tax due on the transaction, or KES 2 million, whichever is higher.

This is a meaningful increase from the earlier KES 1 million / 10%-of-tax standard set out in the original 2024 regulations, and it’s worth confirming the current figure with a tax advisor or the KRA website, since penalty amounts have been revised more than once.

2. Disallowed expense deductions.

This is usually the bigger, quieter cost. Under Section 16(1)(c) of the Income Tax Act, any business expense not backed by a valid eTIMS invoice cannot be claimed as a tax-deductible cost, full stop.

If you pay KES 100,000 in rent but your landlord never issues an eTIMS invoice, KRA disallows the entire deduction.

You end up paying tax as though you never incurred the expense at all. For businesses with high volumes of informal suppliers, construction, hospitality, logistics, and retail are particularly exposed; this can add up to a far larger tax bill than any single fine.

3. Loss of your Tax Compliance Certificate (TCC).

eTIMS registration now feeds into TCC eligibility, and the TCC is required for government tenders, many corporate contracts, licenses, and other regulatory dealings.

Operating outside eTIMS doesn’t just risk a fine; it can lock a business out of formal trade altogether, because compliant buyers will simply move to suppliers who can issue valid invoices.

Put together, these three consequences are why accountants increasingly describe eTIMS as non-optional: it isn’t a form you fill in once and forget; it’s a live feed that now determines what you’re allowed to deduct and who’s willing to do business with you.

Getting Started: The Basics of Onboarding

If your business isn’t on eTIMS yet, registration itself is straightforward as long as your KRA PIN is active:

Log into iTax with your KRA PIN and password.
Navigate to the eTIMS menu and start the registration process.
Choose the right solution for your business size. Options range from eTIMS Lite (via the eCitizen portal or USSD, aimed at small and micro taxpayers) to eTIMS Client software and full system-to-system API integration for larger businesses and retail point-of-sale setups.
Submit your business details and complete the application.

Once you’re onboarded, every invoice you issue is signed and transmitted to KRA automatically, no manual double entry required if you’re using a properly integrated point-of-sale or accounting system.

The Bottom Line

eTIMS is no longer a “nice to have” or a rule that only applies to large, VAT-registered companies.

As of 2026, it applies to essentially anyone carrying on business in Kenya; it directly determines which of your expenses are tax-deductible, and KRA is now validating your tax returns against it automatically rather than waiting for an audit to catch discrepancies.

The practical takeaway for SMEs, entrepreneurs, and accountants alike: get registered if you haven’t already, start asking your suppliers whether they’re eTIMS-compliant before you pay them, and keep digital records rather than relying on paper receipts.

The cost of staying outside the system, in disallowed deductions, penalties, and lost contracts, is now far higher than the effort of getting compliant.

This article is intended as general information and is not a substitute for advice from a licensed tax professional.

Penalty amounts and thresholds under Kenyan tax law are periodically revised by the Finance Act and KRA regulations, so confirm current figures with KRA or your tax advisor before making compliance decisions.