Non-Compliant Businesses Need To Be Wary of The Kenya Revenue Authority’s (KRA)
Heightened Scrutiny of the Use of the Electronic Tax Invoice Management System (eTims).
Kenya Revenue Authority (KRA) now checks eTIMS use more closely. As Pedo and Associates, we help you stay ahead of Kenya’s changing tax rules. KPMG’s alert on February 3, 2026, shows a big change: KRA enforces eTIMS not just for VAT, but also for income tax.
This means more real-time checks on your transactions. Here is a simple breakdown of the changes and easy steps to stay safe from penalties.
The Big Change: From Summary Reporting to Real-Time Scrutiny
KRA no longer relies only on yearly summaries. Instead, it uses automated systems for ongoing, detailed reviews. For example, when you file your income tax return for 2025, iTax automatically compares your declared income and expenses with these sources:
- eTIMS records
- Withholding tax data
- Customs import records
This automatic check started on January 1, 2026..
Key Impact: Expenses Without eTIMS Invoices Get Disallowed
KPMG warns that KRA disallows business expenses for income tax if they lack valid eTIMS invoices—even if you really paid them. As a result, your taxable income increases, and you may pay additional tax, along with penalties and interest.
This rule applies widely, but some exemptions exist (for example, certain salaries, specific imports, or final withholding items under the Tax Procedures Act and rules).
What began as a VAT tool has now evolved into a central pillar for enforcing income tax compliance across the board.
Who Must Follow eTIMS Rules?
The rules cover almost everyone in business:
In short, if you run a business in Kenya, you must comply. Non-compliance can lead to higher taxes, disallowed costs, and audits.
Our Practical Advice: Act Now to Protect Your Business
At Pedo and Associates, we guide businesses through these changes every day. Contact us for a quick eTIMS review, compliance check, or help with reconciliations before your next filing. We offer support that fits your exact needs.
Stay informed, stay compliant, and let’s face these changes together for your peace of mind and business growth.
Best regards,
Pedo and Associates
Tax Advisors | Nairobi, Kenya
Stay informed. Stay compliant. Pedo and Associates – Legal Clarity. Policy Insight.
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This post is for informational purposes and is based on publicly reported insights from KPMG https://kpmg.com/ke/en.html and KRA announcements as of February 2026. Tax rules can evolve—always consult a professional for advice specific to your situation.
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