eTIMS for Small Businesses in Kenya: What You Must Do and When

Every person in business in Kenya must issue electronic tax invoices through KRA's eTIMS, including businesses that are not registered for VAT. The rule has applied since 1 September 2023, and since 1 January 2024 a business expense without a valid electronic tax invoice cannot be deducted for income tax. Most small businesses can use one of the free eTIMS Lite options on eCitizen, on USSD *222# or in the mobile app.

I have kept this to what KRA itself publishes, with a link for each rule.

What is eTIMS?

eTIMS is KRA's Electronic Tax Invoice Management System. Each invoice goes to KRA as you issue it, so KRA can match your sales against your customers' expenses. KRA says the software is free, including the online portal and the eTIMS Client. (KRA eTIMS FAQs).

Who must use eTIMS?

KRA's notice of 27 December 2023 covers all persons carrying on business, including those not registered for VAT (KRA public notice). That includes turnover tax and rental income tax payers. VAT-exempt businesses must onboard too, and KRA names hospitals, schools, tours and travel agents and NGOs in business as examples. VAT-registered businesses already on TIMS electronic tax registers may keep using them.

There is a rule for buyers as well. When you buy from a small business whose annual turnover does not exceed KES 5 million, KRA says you, the buyer, issue the tax invoice on the seller's behalf through the buyer-initiated invoicing service on ecitizen.kra.go.ke. That keeps the cost deductible.

Which dates matter?

• 1 September 2023: electronic invoicing applies to all persons in business.
• 1 January 2024: business expenses without a valid electronic tax invoice stop being deductible for income tax.
• 31 March 2024: the onboarding window for non-VAT businesses closed. Onboard now if you have not.
• 1 January 2026: KRA began checking income and expenses in tax returns against eTIMS and TIMS records, withholding tax data and customs import records (KRA notice).
• 2025 returns only: you may declare valid business expenses without eTIMS invoices, subject to checks after filing. From the 2026 year of income, all declared income and expenses must be backed by valid electronic tax invoices (KRA notice).

So the return you file in 2027 for this year will be checked against eTIMS data. Section 23A of the Tax Procedures Act allows some exceptions that KRA's notice does not list, so check with your accountant before treating any cost as exempt.

Which eTIMS option suits my business?

As a rough guide, match the option to how you sell:

• A few invoices a month: eTIMS Lite on the web through eCitizen, on USSD *222# (no internet needed, for individuals and sole proprietors), or in the mobile app, listed as "eTIMS Non VAT" in the app stores.
• Services only: the Online Portal.
• Goods across branches or tills: the eTIMS Client, software that keeps invoicing when the internet drops and sends the invoices once you reconnect.
• Billing from your own app or accounting software: OSCU, a system-to-system link, built in-house or through an approved integrator. VSCU is the option for high volumes and also works offline.

How do I sign up?

The Lite options start from eCitizen, *222# or the app. For the others, KRA's steps are:

1. Go to etims.kra.go.ke, click Sign-Up and choose PIN. Enter your KRA PIN and click Verify.
2. Create a password and enter the OTP (a one-time code) sent to the phone number on your iTax profile.
3. Log in, click Service Request, then eTIMS. A company adds a director's PIN, confirmed by an OTP sent to that director.
4. Choose Online, eClient, OSCU or VSCU, attach any documents requested and send, then wait for an SMS confirming it. For the eTIMS Client, give the serial number and model of the device.

No OTP? The number on your iTax profile is probably out of date. Update it in iTax first.

What should I do every month?

• Issue the eTIMS invoice when you bill, and add your customer's KRA PIN when the customer is a business, since they need it to claim the expense.
• Ask suppliers for eTIMS invoices before you pay. A month later it is much harder.
• Compare your sales records, M-Pesa statements and bank statements with eTIMS, so gaps show up while they are easy to fix.

If you want to see how other founders handle it

Hackhouse is a builders' hub at 124 Manyani East Road, Nairobi, for anyone who is building. Come on a free tour, Monday to Friday between 10am and 4pm, and talk to founders at the house who have set up eTIMS already. A day pass from KES 1,000 gives you a desk to get it done. In our community, builders share what worked for them.

Frequently asked questions

Do I need eTIMS if I am not registered for VAT?

Yes. KRA requires all persons carrying on business to issue electronic tax invoices, including those not registered for VAT and those selling VAT-exempt goods and services.

Is eTIMS free?

KRA says the software is free, including the online portal and the eTIMS Client. You only pay if you connect your own billing system through one of KRA's approved third-party integrators, who may charge you.

What if my supplier does not issue eTIMS invoices?

Without a valid electronic invoice, KRA may not allow the expense. If the supplier's annual turnover does not exceed KES 5 million, issue the invoice yourself through buyer-initiated invoicing on ecitizen.kra.go.ke.

Sources

• Learn about eTIMS (FAQs), Kenya Revenue Authority
• Electronic Tax Invoicing for Non-VAT Registered Persons, Kenya Revenue Authority
• Validation of Income and Expenses in the Income Tax Returns, Kenya Revenue Authority
• Filing of 2025 Income Tax Returns, Kenya Revenue Authority
• Procedure for eTIMS Registration, Kenya Revenue Authority
• Procedure for eTIMS Application, Kenya Revenue Authority

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