Understanding eTIMS: Why It Now Applies to All Businesses in Kenya

The introduction of the Electronic Tax Invoice Management System (eTIMS) represents one of the most transformative shifts in Kenya’s tax administration. Although many still assume eTIMS applies only to VAT-registered entities, from 1st September 2023, it became mandatory for all businesses, regardless of size or tax category.

What is eTIMS?

eTIMS is a digital invoicing platform developed by the Kenya Revenue Authority (KRA) to improve tax compliance, increase transparency, and curb fraudulent invoicing practices.

KRA’s investigations in 2016 revealed that some taxpayers were claiming input VAT using fictitious purchase invoices supplied through networks of “missing traders.” To close these gaps, KRA launched the Tax Invoice Management System (TIMS) on 1st August 2021, requiring VAT-registered entities to integrate Electronic Tax Register (ETR) devices with their billing systems to ensure all issued invoices were verifiable.

To provide more flexible and accessible options, KRA later introduced eTIMS, a software-based solution that allows businesses to generate and manage tax invoices using computers, mobile apps, and other electronic devices.

The Finance Act, 2023 further tightened compliance by providing that expenses or losses supported by invoices not generated through eTIMS would not qualify as deductible—except for legally exempt transactions. KRA reaffirmed this position through a Public Notice, clarifying that from 1st January 2024, only eTIMS-compliant invoices will be acceptable for corporation tax deductions.

Who Must Use eTIMS?

All persons engaged in business activities must comply, including:

Non-VAT registered businesses
Professionals and consultants
Sole proprietors
Partnerships
Limited companies
Traders in the informal sector

Common eTIMS Misconceptions

“eTIMS is only for VAT-registered taxpayers.”
Not anymore—all businesses must onboard and issue eTIMS-compliant invoices.

“Small businesses are exempt.”
Small enterprises (turnover below KSh 5 million) may use reverse invoicing, but they must still onboard to eTIMS and issue invoices where applicable.

Why Every Business Should Care About eTIMS

Expense Deductibility – Only expenses supported by eTIMS invoices are allowable for tax purposes.
Business Continuity – Many companies only transact with eTIMS-compliant suppliers to safeguard their own deductions.
Avoiding Penalties – Non-compliance may lead to penalties, denied expenses, and increased audit exposure.
Simplified Tax Filing – eTIMS automatically transmits invoice data to KRA, reducing administrative workload.
Credible Transaction Records – eTIMS provides verifiable proof of business transactions.

Exemptions Under the Tax Procedures Act

Certain transactions listed under Section 23 of the Act are exempt from eTIMS invoicing, including:

Employment income (emoluments)
Imports
Interest payments
Transactions involving investment allowances
Airline passenger ticketing
Payments subject to final withholding tax

How to Onboard to eTIMS

KRA offers multiple onboarding methods to accommodate diverse business structures:

eTIMS Online Portal – Ideal for SMEs and service providers
eTIMS Client Software – For businesses with internal accounting systems
API Integration – Suitable for enterprises with ERP systems
eTIMS Lite Mobile App – Designed for small traders and professionals

New Requirements: Enhanced Tax Compliance Certificate (TCC) Rules

A Public Notice issued on 24th October 2025 updated the TCC application process to align with eTIMS implementation.

Effective immediately, eTIMS/TIMS compliance is a mandatory requirement for:

Companies, partnerships, and other non-individual entities
Individuals earning income other than employment income

Applicants must:

Be fully registered on eTIMS/TIMS if engaged in business
Comply with all other filing and payment obligations

This update underscores KRA’s commitment to a fully digital tax ecosystem and highlights that eTIMS compliance now goes beyond invoicing—it is a precondition for being deemed tax compliant.

Conclusion

Whether you are a consultant, boutique owner, mechanic, retailer, or freelancer, eTIMS is now a compulsory component of Kenya’s tax system. Lack of awareness is no longer an excuse.

Businesses should promptly adopt eTIMS to maintain deductibility of expenses, avoid penalties, and stay in good standing with KRA.

How AJS Advocates Can Support You

We provide end-to-end assistance to help businesses meet eTIMS and TCC requirements, including:

Onboarding and System Setup
Staff Training and Capacity Building
Guidance on Invoicing and Exemptions
Compliance Reviews and Monitoring
Customized Compliance Solutions for SMEs, professionals, and corporations

At AJS Advocates, we help simplify compliance so you can focus on scaling your business with confidence.

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