Kenyan small businesses using M-Pesa should prepare for evolving digital tax compliance requirements. However, claims that the Kenya Revenue Authority (KRA) and Safaricom will automatically link merchant payments to eTIMS require official confirmation.
KRA already operates the Electronic Tax Invoice Management System (eTIMS), which enables businesses to generate electronic tax invoices. The proposed automatic integration with M-Pesa Till, Paybill and Pochi la Biashara transactions was not confirmed in the official sources reviewed.
What Is eTIMS?
eTIMS is KRA’s electronic invoicing system. It allows businesses to generate and transmit tax invoices electronically. KRA generally requires businesses to use eTIMS, subject to applicable exemptions and legal provisions.
The system offers different solutions for businesses of varying sizes, including online invoicing tools and simplified mobile services.
Can Small Traders Use eTIMS on Their Phones?
Yes. Eligible individuals and sole proprietors can access eTIMS Lite through the USSD code *222#. The service provides a simplified way to manage electronic invoicing. Businesses can also explore other eTIMS solutions through KRA’s official platforms.
Small traders can therefore begin addressing their invoicing obligations without waiting for any proposed M-Pesa automation.
Will M-Pesa Payments Automatically Generate Tax Invoices?
A direct connection between M-Pesa merchant payments and eTIMS could reduce manual work and simplify sales reconciliation.
However, no official confirmation was established for a system that automatically generates an eTIMS invoice for every payment made through a Till, Paybill or Pochi la Biashara.
KRA’s existing reverse-invoicing framework is also different from automatic invoicing for all merchant payments. Reverse invoicing allows eligible buyers to generate invoices on behalf of suppliers under specific conditions.
Business owners should wait for official guidance before assuming that every digital payment will automatically produce a tax invoice.
Will KRA Track Business Income Through M-Pesa?
Digital payment records can help businesses maintain accurate accounts. However, receiving money through M-Pesa does not automatically mean every transaction represents taxable business income.
Payments may include refunds, loan repayments or personal transfers. Traders should maintain clear records that distinguish these transactions from sales.
Businesses must also declare income according to the tax rules applicable to their operations. They should not assume that automated transaction tracking will replace accurate bookkeeping or tax filing.
How Small Businesses Can Prepare
Traders can take practical steps to improve compliance now.
- Keep accurate records: Track sales, expenses, refunds and other transactions.
- Separate personal and business funds: Use dedicated accounts or wallets where possible.
- Use eTIMS: Check your eligibility and explore available invoicing options.
- Keep supporting documents: Retain receipts, invoices and payment statements.
- Follow official announcements: Confirm any changes through KRA and Safaricom before adjusting your procedures.
What Business Owners Should Remember
KRA already provides electronic invoicing services, including simplified options for eligible small businesses. However, automatic integration covering all M-Pesa merchant channels remains unconfirmed in the official sources reviewed.
For now, business owners should continue meeting their existing tax obligations and avoid relying on unverified claims about a new system.
