eTIMS Is Now the Price of a Deduction: What Every Kenyan Business Should Do

For years, a supplier invoice and a bank payment were enough to claim a business expense against corporate tax. That is no longer the case. From 1 January 2024, the Kenya Revenue Authority recognises only invoices generated through the electronic Tax Invoice Management System, known as eTIMS, as valid support for an income tax deduction.

The rule is broader than many owners realise. It applies to all businesses, not only those registered for VAT. If a supplier cannot issue you an eTIMS invoice, the amount you paid them may be disallowed when your corporate tax is assessed, which quietly raises your effective tax rate.

A disallowed expense is not a timing difference you recover later. It is a permanent increase in taxable profit. A business running on thin margins can find that a handful of non compliant suppliers turns a modest profit into a larger tax bill than the cash position can comfortably meet.

The KRA also holds a penalty for failing to onboard when required to do so. The figure was set at KES 100,000 in the relevant amendment, but the larger cost is almost always the lost deductions, not the fine itself.

Start with a supplier audit. List your recurring vendors and confirm which of them can issue eTIMS invoices today. For the ones that cannot, decide whether to help them onboard, switch suppliers, or accept the tax cost with eyes open.

Next, tie eTIMS status into your accounts payable process so that a non compliant invoice is flagged before it is paid, not discovered at year end. Small businesses can use the KRA online portal or the eTIMS mobile and web applications rather than a full system integration.

Finally, treat the transition as a chance to clean up your records. Businesses that get their invoicing in order also tend to find their VAT, withholding tax, and management reporting improve at the same time.