What is the eTIMS mandate in Kenya?

The eTIMS mandate is a KRA requirement that all VAT-registered businesses issue electronic tax invoices through the eTIMS system in real time. It applies to every VAT-registered taxpayer in Kenya, effective from 1 July 2024. Invoices must be generated through KRA-approved eTIMS channels and transmitted to KRA automatically at the point of sale.

Who is required to use eTIMS?

Every person registered for VAT in Kenya must use eTIMS for invoicing. There is no turnover threshold exemption - if you are VAT-registered, you must use eTIMS. This includes businesses below the KES 5 million threshold who registered voluntarily, small taxpayer regime participants, and businesses using the special VAT table for unregistered suppliers.

Can I use eTIMS if I am not VAT-registered?

No. eTIMS is mandatory for all persons engaged in business - VAT-registered or not. KRA has progressively extended the mandate to non-VAT-registered businesses, and Tax Compliance Certificate (TCC) issuance is now tied to eTIMS registration. A business with annual turnover above KES 5 million must comply regardless of VAT status; smaller businesses previously outside the mandate are also being onboarded as enforcement widens.

What happens if I do not onboard eTIMS within 30 days of VAT registration?

The penalties with clear legal footing sit in the Tax Procedures Act: issuing a non-compliant electronic tax invoice is exposed to TPA s.86 - since the Finance Act 2026 (in force 1 July 2026) the higher of 5% of the tax due, KES 100,000 (companies), or KES 10,000 (individuals), and before that two times the tax due (the ETI Regulations LN 64/2024 refer breaches to s.86); and failing to integrate a data-management system after written notice costs up to KES 100,000 per month (TPA s.59A(5), for taxpayers with turnover above KES 5 million). Figures like KES 1,000,000 or 10% of the tax per invoice, KES 50,000 per month, or KES 500,000 per month circulate in some guidance but are not standalone statutory penalties under the enacted law.

What is the penalty for issuing a non-eTIMS invoice?

Issuing an invoice that fails to comply with eTIMS requirements exposes you to TPA s.86 - since the Finance Act 2026 (in force 1 July 2026) the higher of 5% of the tax due, KES 100,000 (companies), or KES 10,000 (individuals); before that, two times the tax due. This applies to handwritten receipts, parallel invoicing, or any attempt to bypass the eTIMS system - and KRA denies input VAT on any purchase not backed by a compliant eTIMS invoice.

Can I claim input VAT on a purchase if the supplier did not use eTIMS?

No. KRA strictly disallows input VAT claims on purchases where the supplier did not issue an eTIMS-compliant invoice. This is one of the most consequential enforcement changes - you cannot claim input VAT on M-Pesa till receipts, handwritten receipts, or any non-eTIMS document, even if the purchase is genuine.

What are the eTIMS invoicing channels available?

KRA provides multiple eTIMS channels: (1) eTIMS mobile app (available on Google Play and App Store), (2) eTIMS web portal, (3) eTIMS API integration for ERP/accounting systems, and (4) USSD (*222#). Businesses can choose the channel that best fits their volume and technical capability.

What information must an eTIMS invoice include?

An eTIMS invoice must include: KRA PIN of the supplier and customer, invoice date and time, sequential invoice number, description of goods or services, quantity and unit price, taxable value, VAT amount, total amount, and the eTIMS QR code. Invoices to non-VAT-registered customers (B2C) do not require the customer's KRA PIN but must still include the supplier's details.

Does eTIMS apply to B2C sales (sales to individuals)?

Yes. Every sale - B2B or B2C - must go through eTIMS. For B2C sales where the customer does not have or provide a KRA PIN, you issue a simplified eTIMS invoice without the customer PIN. The sale is still transmitted to KRA in real time.

Can I use eTIMS offline?

Yes. The eTIMS mobile app supports offline mode. Invoices generated offline are queued and transmitted to KRA when the device reconnects to the internet. However, the invoice must still be generated through the eTIMS app - handwritten or system-generated invoices not passed through eTIMS are not compliant.

How do I handle eTIMS when eTIMS itself is down?

KRA has provided guidance for eTIMS downtime scenarios. The mobile app generates a control number (offline code) that serves as a reference for the transaction. You issue the invoice using the app's offline mode, and it syncs when the service is restored. The key rule: the invoice must still pass through the eTIMS app, not a fallback manual system.

Does eTIMS integrate with my existing accounting software?

Yes. KRA provides an eTIMS API that allows integration with ERP systems (SAP, Oracle), accounting software (QuickBooks, Xero), and POS systems. API integration requires technical setup and KRA approval. For most SMEs, the mobile app or web portal is sufficient.

What is the stock reconciliation requirement under eTIMS?

VAT-registered businesses with physical inventory must submit monthly stock reports through eTIMS. This includes opening stock, purchases/ additions, sales, and closing stock. KRA cross-references stock movements against eTIMS invoices to detect undeclared sales. Discrepancies trigger audits.

How do eTIMS invoices affect VAT return filing?

eTIMS invoices are automatically transmitted to KRA's system. When you file your VAT return, certain fields may be pre-populated from eTIMS data (auto-populated return). This means KRA already has a record of your sales - the return must match what eTIMS transmitted. Discrepancies between eTIMS data and filed returns are audited automatically.

eTIMS Mandate Kenya 2026: Who Must Comply

What Is the eTIMS Mandate?

The eTIMS (Electronic Tax Invoice Management System) mandate is a KRA requirement compelling every VAT-registered person in Kenya to issue all tax invoices exclusively through the eTIMS system. It took effect on 1 July 2024 under the Finance Act 2023 and remains in full force under the Finance Act 2026.

Unlike earlier optional invoicing systems, eTIMS is mandatory and real-time. Every invoice is transmitted to KRA at the point of sale. The mandate fundamentally changed how VAT compliance works in Kenya - KRA no longer relies on self-reported sales data alone. It has a real-time feed of your transactions.

The practical effect: if it is not in eTIMS, it did not happen for KRA's purposes. Input VAT claims on non-eTIMS purchases are denied. Sales not recorded in eTIMS show up as discrepancies during audits. The mandate removes the gap between what you report and what KRA already knows.

Who Must Comply?

The eTIMS mandate applies to all persons engaged in business in Kenya - VAT-registered or not. KRA widened the mandate to every business, so there is no exemption based on:

VAT status: The mandate covers VAT-registered businesses and non-VAT-registered businesses alike; Tax Compliance Certificate (TCC) issuance is now tied to eTIMS registration
Turnover: A business with annual turnover above KES 5 million must comply regardless of VAT status
Business type: Retailers, wholesalers, service providers, manufacturers, landlords, NGOs, tech startups - all must use eTIMS
Customer type: B2B, B2C, cash sales, credit sales - all must go through eTIMS
Small taxpayer regime: Businesses on turnover tax still need eTIMS for invoicing

Onboarding: once you are required to operate eTIMS (VAT-registered or otherwise in scope), onboard without delay. Issuing a non-compliant invoice attracts the TPA s.86 penalty - the higher of 5% of the tax due, KES 100,000 (companies), or KES 10,000 (individuals) since 1 July 2026 (previously two times the tax due).

eTIMS Onboarding: What You Need to Do

Onboarding is the first step after VAT registration. Here is the process:

Register for eTIMS via iTax, choosing your channel (mobile app, web portal, or API integration)
Choose your channel: Mobile app (recommended for most SMEs), web portal, or API integration for ERP/POS systems
Download the eTIMS app from Google Play Store or Apple App Store, or access the web portal at etims.kra.go.ke
Register your device and link it to your KRA PIN
Configure your business details: Business name, address, contact details, logo (optional)
Start issuing invoices through the system. All invoices are automatically transmitted to KRA

API integration requires additional steps: technical setup, KRA approval, and testing in the sandbox environment. Most SMEs do not need this - the mobile app covers standard invoicing needs.

Need help onboarding? We handle eTIMS setup as part of our VAT registration service (KES 5,000) - includes PIN generation, eTIMS onboarding guidance, and taxpayer education.

Daily Invoicing Requirements

Every sale requires an eTIMS invoice. Daily obligations:

Issue an eTIMS invoice for every sale - cash, credit, B2B, B2C. No exceptions
Include all mandatory fields: KRA PIN (supplier and customer for B2B), date, sequential number, description, quantity, unit price, taxable value, VAT, total, QR code
Credit notes and debit notes must also go through eTIMS for adjustments and corrections
Offline mode: The mobile app works offline. Generate invoices through the app even without internet - they queue and sync later. Do not switch to manual invoices when offline

Monthly Obligations

Beyond invoicing, eTIMS imposes monthly compliance requirements:

Stock report: Businesses with physical inventory must submit monthly stock reports through eTIMS - opening stock, additions, sales, closing stock. Due by the 5th of the following month
Data submission: Even if you use API integration, monthly data submission to KRA is required to confirm that all invoice data has been transmitted
Reconciliation: Your VAT return must match your eTIMS invoice data. If KRA's system detects discrepancies between eTIMS sales data and your filed return, it triggers an automatic review

eTIMS and Input VAT Claims

This is the most significant enforcement change under the mandate. KRA now disallows input VAT claims on purchases where the supplier did not issue an eTIMS-compliant invoice. This means:

M-Pesa till receipts are not valid VAT invoices - you must request an eTIMS invoice from the supplier
Handwritten receipts are not acceptable for input VAT claims
Invoices from suppliers who are not using eTIMS - even if they are valid VAT-registered businesses - will be rejected during a KRA audit
You are responsible for verifying that your suppliers are eTIMS-compliant. If they are not, your input VAT claim is at risk

Audit Risk: Input VAT on Blocked Purchases

If you claimed input VAT on purchases made with non-eTIMS invoices and KRA audits you, the disallowed VAT plus penalties can significantly exceed the original claim. You should conduct a supplier eTIMS compliance review to identify which of your key suppliers are using eTIMS. For suppliers that are not, request an eTIMS invoice or reconsider the relationship.

Penalties and Enforcement in 2026

eTIMS penalties rest on two legal foundations - the Tax Procedures (Electronic Tax Invoice) Regulations (LN 64/2024) and the Tax Procedures Act. Structure:

Higher of 5% of the tax due, KES 100,000 (companies), or KES 10,000 (individuals) per e-invoice failure (TPA s.86, since Finance Act 2026 / 1 July 2026; previously two times the tax due) - applied to handwritten, non-eTIMS, or parallel invoicing, and to invoices with missing fields
Up to KES 100,000 per month for failing to integrate a data-management system with KRA's electronic system once notified (TPA s.59A(5), for taxpayers with turnover above KES 5 million)
Input VAT denial: Indirect penalty - non-eTIMS purchases result in denied input VAT, increasing your net VAT payable
Stock report non-compliance: Late or missing stock reports can trigger an audit and penalties

A KES 50,000-per-month figure circulates in some business guidance, but it is not a standalone statutory penalty under the ETI Regulations - the enforceable exposure is the per-invoice LN 64/2024 amount and the monthly integration penalty above. KRA has publicly stated that eTIMS enforcement is a priority for 2026. Businesses should expect more audits focused on eTIMS compliance, especially cross-referencing stock reports against invoicing data.

eTIMS and VAT Return Filing

eTIMS invoices are transmitted to KRA in real time. When you file your VAT return on iTax, the system may auto-populate certain fields based on eTIMS data. This creates a direct audit trail: KRA compares your filed return against its eTIMS database.

Your total sales declared on the VAT return should match or exceed the total eTIMS invoices issued for the period
If your return shows lower sales than eTIMS data, KRA's system flags the discrepancy
If your return shows sales higher than eTIMS data, KRA also flags it - unreported eTIMS invoices
Monthly stock reconciliation requirements mean KRA can also detect sales anomalies through inventory mismatches

The auto-populated return feature is being phased in. Not all VAT returns are auto-populated yet, but KRA's eTIMS data is always the reference point during audits.

eTIMS Channels Compared

Channel	Best For	Limitations
Mobile App	SMEs, retailers, low-volume service providers	Manual entry, not ideal for high-volume sales
Web Portal	Businesses without smartphones, desktop workflows	Requires internet, no offline mode
API Integration	High-volume businesses, ERP users, POS systems	Technical setup required, KRA approval needed
USSD (*222#)	Basic invoicing, no smartphone required	Limited functionality, basic invoices only

Common eTIMS Compliance Traps

Assuming eTIMS does not apply to cash sales: It does. Every sale - cash or credit - requires an eTIMS invoice
Using M-Pesa statements as VAT invoices: M-Pesa till receipts are not eTIMS invoices. You must generate an eTIMS invoice separately
Failing to submit monthly stock reports: This is a separate obligation from invoicing. Missing stock reports trigger audits
Not reconciling suppliers: You cannot claim input VAT if your supplier is not eTIMS-compliant, even if you did nothing wrong
Assuming eTIMS downtime excuses non-compliance: The offline mode exists for exactly this scenario. Use it
Deleting or editing invoices after transmission: eTIMA does not allow deletion. Use credit/debit notes for corrections

How eTIMS Affects Different Business Types

Retailers and E-commerce

High-volume, low-value sales make the mobile app the best channel. However, manual entry per transaction can be slow. Consider API integration with your POS system if you process more than ~50 transactions per day. Every sale must generate an eTIMS invoice - including M-Pesa, card, and cash payments.

Service Providers (Consultants, Agencies, Professionals)

Lower invoice volumes make the mobile app or web portal sufficient. Ensure your invoices include the customer's KRA PIN for B2B clients so they can claim input VAT. Issue the eTIMS invoice at the time of service or within standard invoicing cycles.

Landlords and Real Estate

Rental income is subject to VAT for commercial property above the threshold. eTIMS invoices must be issued for rent payments. Monthly stock reports generally do not apply (no inventory), but eTIMS invoicing rules are the same as for any other business.

Manufacturers and Wholesalers

High invoice volumes and inventory make API integration the best choice. Monthly stock reporting is mandatory and critical - stock discrepancies are the most common audit trigger for manufacturing businesses.

NGOs and Non-Profits

NGOs that are VAT-registered must use eTIMS like any other business. Grant-funded purchases and donor reporting may require additional documentation beyond the eTIMS invoice, but the eTIMS invoice remains the primary VAT document.

Related Resources

Complete eTIMS Onboarding Guide - Step-by-step account setup, device registration, and first invoice
eTIMS Invoicing Guide - How to issue, cancel, and correct invoices
eTIMS Compliance Checklist - Daily, monthly, and annual obligations
eTIMS Penalties Guide - Full breakdown of KRA's penalty structure
Finance Act 2026 VAT Changes - All VAT-related changes including eTIMS enforcement
eTIMS Onboarding Service - We set up eTIMS for you
Monthly VAT Filing Service - We file your returns and reconcile against eTIMS data

eTIMS Mandate Kenya 2026: Complete Compliance Guide