Kenya’s 2025 Tax Filing Season: Is Your Business Ready for Full eTIMS Compliance?

What eTIMS Demands from Kenyan Businesses

Since 1 January 2024 the Kenya Revenue Authority (KRA) has required every commercial entity – whether VAT‑registered or not – to join the eTIMS platform. The rule is simple: any expense you intend to deduct must be backed by an electronic tax invoice generated through the system. This marks a sharp departure from the old paper‑based regime, turning invoice creation into a digital, signed, and archived process.

Key technical specs include a local XML filing format, mandatory electronic signatures, and a five‑year archiving mandate. To meet these, businesses need certified TIMS hardware (a dongle or smart card reader) and approved eTIMS software that can plug into their existing accounting tools. The system also forces a clearance model – the invoice is sent to KRA’s portal, cleared, then the buyer can claim the expense.

Contrary to early rumours, the requirement is not limited to VAT payers. Even a sole trader who sells groceries must be able to issue an e‑invoice if they wish to deduct the cost of the goods. The only exception carved out by the regulations is for certain expense categories – salaries, import duties, airline tickets, investment allowances, interest, bank fees, final‑tax withholding, and services from non‑resident providers without a Kenyan permanent establishment are excluded from eTIMS documentation.

Navigating Compliance: Practical Steps and Pitfalls

When KRA announced a grace period for non‑VAT entities, many small firms used the extra time to test the portal. That window closed on 31 March 2024, and the clock is now ticking for every business to be fully operational on eTIMS. Below is a practical roadmap to move from registration to daily use.

• Create a portal account: Visit etims.kra.go.ke, enter your KRA PIN, and verify with the OTP sent to your registered mobile number.
• Select a certified eTIMS software package – KRA lists several free and paid options that integrate with popular accounting suites.
• Upload supporting documents: copies of the National ID for each director or proprietor, a signed commitment form, and, where applicable, a vendor’s KRA PIN.
• Install the TIMS hardware token on each device that will generate invoices. The token creates the required electronic signature.
• Run a test transaction: issue a dummy invoice to a friendly buyer, submit it for clearance, and confirm the receipt of the clearance code.
• Train staff on how to generate, send, and store invoices. Emphasise the five‑year retention rule – the portal automatically archives, but locally stored copies are still advisable.

Small‑scale farmers and micro‑enterprises with turnover under KSh 5 million can take advantage of the Buyer Initiated Invoicing Solution on eCitizen. In that model, the purchaser creates the e‑invoice on behalf of the seller, significantly lowering the technology burden on the farmer.

While eTIMS promises lower compliance costs (the software itself is free, and the hardware token is a one‑off purchase), adoption has been uneven. Rural areas suffer from unreliable internet, and some accounting firms still rely on legacy systems that do not speak XML. Moreover, a segment of business owners remain skeptical, fearing that digital records could expose them to audits.

To mitigate these challenges, KRA runs periodic webinars, offers a dedicated help desk, and has partnered with local ICT hubs to provide community access points. Companies that encounter repeated glitches are advised to enlist a certified tax consultant familiar with the electronic invoice workflow.

The rollout of eTIMS also dovetails with Kenya’s broader tax modernization agenda. The country’s ratification of the Multilateral Instrument (MLI) – effective 1 May 2025 – signals a commitment to curb BEPS (Base Erosion and Profit Shifting). By digitising invoice data, KRA gains a richer audit trail, making it easier to spot transfer‑pricing abuse and other cross‑border tax avoidance schemes.For the 2025 filing season, the stakes are clear: businesses that fail to generate compliant e‑invoices face penalties ranging from KSh 10,000 per missing invoice to potential suspension of tax filing rights. Conversely, firms that master the platform enjoy streamlined return filing, real‑time stock management, and a clearer view of cash flow.

Given the tight timeline, the prudent move is to audit your current invoicing process today, register any missing entities on the portal, and run a pilot batch of transactions before the filing deadline. Early adopters report smoother returns and fewer queries from KRA auditors, a competitive edge worth the short‑term effort.