Kenya's tax landscape has undergone a major shift with the mandatory adoption of Electronic Tax Registers (ETRs) and the Tax Invoice Management System (TIMS). KRA now requires all VAT-registered businesses to use compliant electronic invoicing systems that transmit invoice data directly to the tax authority in real time. Understanding these requirements is critical for avoiding penalties and keeping your business compliant.
What Is an Electronic Tax Register (ETR)?
An Electronic Tax Register is a device or software system approved by KRA that records sales transactions and transmits the data to KRA's servers. The ETR generates a unique Control Unit Invoice Number (CU Invoice No.) for every transaction, which serves as proof that the sale was reported to the tax authority. Under the current regime, ETRs must be connected to KRA's TIMS platform for real-time data transmission.
The Evolution: From ETR to eTIMS
KRA introduced the electronic Tax Invoice Management System (eTIMS) as an upgraded replacement for the older ETR hardware devices. While traditional ETRs were physical devices purchased from approved suppliers, eTIMS allows businesses to comply using software-based solutions including web portals, mobile apps, and API integrations. This is a significant advantage for businesses that want to integrate tax compliance directly into their existing invoicing workflows.
| Feature | Traditional ETR | eTIMS |
|---|---|---|
| Format | Physical hardware device | Software (web, mobile, API) |
| Data Transmission | Periodic upload | Real-time transmission to KRA |
| Cost | KES 25,000 - 60,000 for device | Free (KRA portal) or integrated in software |
| Integration | Standalone device | Can integrate with existing invoicing software |
| Invoice Validation | Device generates fiscal receipt | KRA validates and returns signed invoice |
| Who Must Use It | Being phased out | All VAT-registered businesses (mandatory) |
Who Must Comply with eTIMS?
As of the latest KRA directives, all VAT-registered businesses in Kenya must use eTIMS-compliant invoicing. KRA has also been progressively extending the requirement to non-VAT registered taxpayers for income tax purposes. This means that virtually every formal business in Kenya needs to ensure their invoicing system can interface with eTIMS, either through the KRA portal or via API integration.
Penalty Warning: Businesses that fail to comply with eTIMS requirements face penalties including fines, denial of expense deductions, and potential closure orders from KRA. Non-compliant invoices may also be rejected by your clients' auditors.
What Your Invoicing Software Must Support
Not all invoicing software meets KRA's eTIMS requirements. When evaluating or building your invoicing system, ensure it supports the following capabilities. Missing even one of these features could leave your business non-compliant.
- Real-time transmission of invoice data to KRA's eTIMS servers via the official API.
- Receipt and storage of the KRA-signed invoice response, including the Control Unit Invoice Number.
- Proper handling of all invoice types: standard tax invoices, credit notes, and debit notes.
- Accurate VAT calculation at the current rate (16% standard, 8% petroleum, 0% for exempt/zero-rated supplies).
- Sequential invoice numbering that matches KRA's requirements and cannot be tampered with.
- Secure storage of all transmitted invoice data for at least five years, as required by Kenyan tax law.
- Support for buyer KRA PIN validation to ensure B2B invoices reference valid PINs.
Integration Options for Kenyan Businesses
- 1KRA eTIMS Portal: Free web-based interface where you manually enter each invoice. Suitable for businesses with low transaction volumes.
- 2KRA eTIMS Taxpayer App: Mobile application for issuing invoices on the go. Good for small traders and sole proprietors.
- 3API Integration: Your invoicing software connects directly to KRA's eTIMS API, transmitting invoices automatically. This is the best option for businesses with moderate to high transaction volumes.
- 4ERP Integration: Large businesses can integrate eTIMS into their existing ERP systems (SAP, Oracle, etc.) for fully automated compliance.
Preparing Your Business for Full Compliance
Start by auditing your current invoicing process to identify gaps. Confirm that your software vendor supports eTIMS integration or plan to migrate to one that does. Register your business on the KRA eTIMS portal and obtain your API credentials if you plan to use software integration. Train your staff on the new invoicing workflow to ensure every transaction is captured and transmitted correctly from day one.
Compliance is not optional, and KRA has been increasingly aggressive with enforcement. Businesses that proactively adopt eTIMS-compliant invoicing software position themselves to avoid penalties while also benefiting from more accurate financial records and faster VAT processing.
