eTIMS Mandate Kenya 2026: Complete Compliance Guide

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 every VAT-registered person in Kenya. There is no exemption based on:

• Turnover: If you are VAT-registered — whether because your turnover exceeds KES 5 million (KES 8 million from September 2024) or you registered voluntarily — eTIMS applies
• 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 the 8% turnover-inclusive regime still need eTIMS for invoicing

Businesses that are not VAT-registered are not required to use eTIMS. However, if an unregistered business crosses the VAT registration threshold, it must register and then onboard eTIMS within 30 days.

eTIMS Onboarding: What You Need to Do

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

1. Onboard within 30 days of VAT registration. KRA imposes KES 50,000/month in penalties for late onboarding
2. Choose your channel: Mobile app (recommended for most SMEs), web portal, or API integration for ERP/POS systems
3. Download the eTIMS app from Google Play Store or Apple App Store, or access the web portal at etims.kra.go.ke
4. Register your device and link it to your KRA PIN
5. Configure your business details: Business name, address, contact details, logo (optional)
6. 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.

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

Penalties and Enforcement in 2026

The Finance Act 2026 introduced higher minimum penalties for eTIMS non-compliance. Current penalty structure:

• KES 50,000 per month for failure to onboard eTIMS within 30 days of VAT registration
• Up to KES 100,000 per instance for issuing non-compliant invoices (handwritten, non-eTIMS, parallel invoicing)
• Minimum penalty threshold: KES 100,000 for businesses, KES 10,000 for individuals for failures like not issuing an eTIMS invoice, not filing electronically, or not paying tax electronically
• 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

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

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