Kenyan small businesses are increasingly required to manage their sales and business invoices through the Kenya Revenue Authority’s eTIMS platform. eTIMS, or the Electronic Tax Invoice Management System, provides businesses with digital tools for issuing and transmitting electronic tax invoices to KRA.
The requirement applies to persons engaged in business, whether registered for VAT or not. This includes businesses in the informal sector. For small businesses, understanding the right eTIMS solution can make tax compliance easier while reducing paperwork.
What eTIMS Means for Small Businesses
KRA requires businesses to issue electronic tax invoices through the prescribed system. The rules also affect business expenses. KRA states that, from January 1, 2024, business expenditure generally needs to be supported by an electronic tax invoice to qualify for a tax deduction.
However, KRA lists specific expenses that are excluded from this requirement. These exclusions include salaries and wages, imports, interest, fees charged by financial institutions and certain other specified costs.
Which eTIMS Solution Should You Use?
KRA provides several options depending on the nature and size of the business.
eTIMS Lite
eTIMS Lite is designed for small and micro taxpayers who are not registered for VAT.
It is available through:
- eCitizen web portal
- USSD *222#
- eTIMS Lite mobile app
KRA says the USSD option is available for individuals and sole proprietors.
eTIMS Client
Businesses dealing in goods or both goods and services can use the downloadable eTIMS Client.
The software supports multiple branches, pay points and cashier tills. It can also operate on Windows and Android devices.
System-to-System Integration
Businesses with existing POS or ERP systems can integrate them with eTIMS through VSCU or OSCU.
These options are designed for businesses with extensive transactions or existing online invoicing systems.
How to Register for eTIMS
KRA has enabled taxpayers to self-onboard without waiting for KRA approval of the registration request. Before installing an eTIMS solution, businesses must first register and provide details about the nature of their business.
For eligible small and micro businesses, eTIMS Lite can then be accessed through eCitizen or *222#.
Buyer Initiated Invoicing
Small businesses and farmers may sometimes sell to buyers without being able to issue an eTIMS invoice themselves. KRA provides Buyer Initiated Invoicing for qualifying situations.
Where a small business or small-scale farmer has annual turnover not exceeding KSh5 million, the purchaser can issue a tax invoice on the seller’s behalf for purposes of claiming the purchase as a business expense. The solution is available through eCitizen.
Is eTIMS Free?
KRA provides its eTIMS software solutions free of charge.
However, businesses that choose direct integration through approved third-party providers may incur additional costs.
Daily eTIMS Compliance Checklist
Small business owners should:
- Issue electronic tax invoices for business sales.
- Keep accurate transaction records.
- Collect compliant invoices for deductible business expenses.
- Check that customer and supplier information is entered correctly.
- Reconcile eTIMS records with internal accounts regularly.
- Train employees on the correct invoicing process.
The Bottom Line
eTIMS is now an important part of running a compliant business in Kenya. Small businesses do not necessarily need expensive invoicing systems. KRA provides several free options, including eTIMS Lite through eCitizen and *222#.
The key is choosing the right solution, issuing accurate invoices and keeping proper records. For a small business, staying ahead of eTIMS requirements can help prevent unnecessary compliance problems and make tax reporting easier.
