See whether your business must issue eTIMS electronic tax invoices, how much of your expenses are disallowed without a valid invoice, the extra income/corporation tax on the add-back, and the 2ร failure-to-issue penalty under the Tax Procedures Act.
eTIMS obligation
Mandatory โ you must issue eTIMS tax invoices and capture each buyer's PIN.
The electronic Tax Invoice Management System (eTIMS) is now mandatory for effectively all businesses in Kenya โ VAT-registered or not, supplying goods or services. The Tax Procedures (Electronic Tax Invoice) Regulations 2024 extended the obligation well beyond VAT, and lighter channels such as eTIMS Lite let smaller traders onboard.
There are two distinct exposures if you do not comply:
s.16(1)(c) โ so you pay income or corporation tax (for example 30%) on the add-back.s.86. Administrative penalties can reach KES 1,000,000.For an expense to be deductible, your supplier must capture your KRA PIN on the eTIMS invoice. Only narrow categories are exempt โ emoluments, imports, certain investment income, and businesses dealing exclusively in exempt supplies such as unprocessed farm-gate produce. Check the rest of your obligations with the KRA filing-deadline tracker.
Effectively every business โ VAT-registered or not, dealing in goods or services. The Tax Procedures (Electronic Tax Invoice) Regulations 2024 extended the electronic Tax Invoice Management System (eTIMS) beyond VAT to all persons carrying on business. Businesses below the VAT threshold onboard through lighter channels such as eTIMS Lite or the taxpayer portal, but they must still issue compliant invoices.
From the 2026 year of income, 100% of claimed business expenses must be supported by a valid eTIMS/TIMS invoice. Any expense without one is disallowed and added back to your taxable profit under the Income Tax Act (Cap 470), s.16(1)(c) โ so you pay income or corporation tax (for example 30%) on the amount added back.
Failure to issue the required electronic tax invoice attracts a penalty of twice the tax due on the transaction under the Tax Procedures Act 2015, s.86. So if KES 50,000 of tax was due on a sale you did not invoice through eTIMS, the penalty is KES 100,000.
Yes. Administrative penalties under the Tax Procedures Act can reach KES 1,000,000, on top of the disallowed-expense and 2ร failure-to-issue exposure. The reliable way to avoid all of it is to onboard eTIMS and have your suppliers issue compliant invoices.
Only narrow categories โ for example emoluments (handled through PAYE), imports, certain investment income, and businesses dealing exclusively in exempt supplies such as unprocessed farm-gate produce. These exemptions are limited, so most traders and service providers are in scope.
KRA validates declared income and expenses against TIMS/eTIMS, customs and withholding data from the 2026 year of income onward. For an expense to be deductible, the supplier must capture your KRA PIN on the eTIMS invoice โ an invoice without your correct PIN will not support the claim.
Informational only โ not tax advice. This checker reflects KRA eTIMS notices, the Tax Procedures (Electronic Tax Invoice) Regulations 2024, the Income Tax Act (Cap 470) s.16(1)(c) on disallowed expenses, and the Tax Procedures Act 2015 s.86 penalty of twice the tax due, current as of June 2026. It is a planning estimate and does not cover every exemption or transitional rule. Verify your position with the Kenya Revenue Authority (Online Services โ eTIMS) or a qualified tax adviser. See our full disclaimer.