If you run a business in Kenya, you have probably heard about eTIMS.
You may already be using it. You may still be trying to understand how it works. Or perhaps you are wondering whether it actually applies to your business.
The short answer is important:
eTIMS is not only for VAT-registered businesses.
The Kenya Revenue Authority (KRA) states that persons engaged in business are required to onboard eTIMS and issue electronic tax invoices. This includes businesses operating as companies, partnerships and sole proprietorships, as well as businesses that are not registered for VAT.
For an SME, however, eTIMS should not simply be viewed as another tax requirement.
Used properly, it can help you keep better records, understand your sales and expenses, and make your financial reporting more reliable.
Here's what Kenyan business owners should know.
What is eTIMS?
eTIMS stands for Electronic Tax Invoice Management System.
It is KRA's electronic invoicing system that allows businesses to generate and manage tax invoices electronically.
KRA provides different eTIMS solutions that can be accessed through computers, laptops, tablets and smartphones. The available options are designed to accommodate businesses with different sizes and operating models.
For smaller businesses, KRA also provides eTIMS Lite, including web, USSD and mobile options for eligible non-VAT taxpayers.
The important point is that you do not necessarily need an expensive accounting system to start using eTIMS.
Who needs to use eTIMS?
KRA states that all persons engaged in business are required to onboard eTIMS and issue electronic tax invoices.
This includes:
- Companies
- Partnerships
- Sole proprietorships
- Associations and trusts conducting business
- VAT-registered businesses
- Non-VAT-registered businesses
- Businesses in the informal sector
- Businesses with different income-tax obligations
Being below the VAT registration threshold does not automatically mean your business is outside eTIMS.
KRA specifically notes that businesses that are not required to register for VAT may still be required to onboard eTIMS.
Why does eTIMS matter to your business?
It is easy to think of eTIMS as something you use only because KRA requires it.
But there is another side to it.
Your invoices are part of your financial records.
If your invoicing is accurate and consistent, it becomes easier to:
- Track sales
- Record business expenses
- Reconcile transactions
- Prepare tax returns
- Monitor cash flow
- Understand business performance
- Respond to tax queries
- Maintain an audit trail
KRA also notes that eTIMS can help taxpayers maintain invoice records and simplify return filing.
In other words, good eTIMS practices can support good financial management.
Do you need to buy an eTIMS system?
Not necessarily.
KRA provides eTIMS software at no charge, including its online portal and eTIMS client software. Businesses that choose to integrate their own invoicing or accounting systems directly with eTIMS may incur costs for third-party integration services.
This means an SME can start with a KRA-provided solution and consider a more integrated setup as the business grows.
The right approach depends on factors such as:
- Number of transactions
- Number of employees
- Number of sales points
- Existing accounting software
- Inventory requirements
- Business processes
- Need for system integration
A growing business may eventually benefit from connecting its accounting or point-of-sale system to its electronic invoicing processes rather than managing everything manually.
What about businesses that are not VAT registered?
This is one of the most common areas of confusion.
Not being VAT registered does not automatically exempt a business from eTIMS.
KRA provides eTIMS Lite solutions specifically for small and micro taxpayers who are not registered for VAT. These include web-based access through eCitizen, USSD access and a mobile application.
So if you operate a small business and are unsure whether eTIMS applies to you, don't assume that your size or VAT status automatically excludes you.
Check your specific obligations.
What happens when you buy from a small supplier?
There is another important scenario that small businesses should understand.
Where a business purchases from a small business enterprise whose annual turnover does not exceed KSh 5 million, KRA provides for the purchaser to issue a tax invoice on behalf of the supplier through the Buyer Initiated Invoicing process.
This can be particularly relevant to businesses buying goods or services from small suppliers who do not have their own invoicing systems.
The buyer-initiated process allows the buyer to generate the invoice while the seller is notified and can approve or reject it through the available process. KRA's current guidance states that sellers have 30 days to accept or reject a buyer-initiated invoice.
This is useful for businesses that work with many small-scale suppliers.
eTIMS and your business expenses
Good expense records are just as important as sales records.
KRA states that, as a general rule, a business expense needs appropriate electronic tax-invoice support to qualify as a deductible business expense, subject to specified exclusions.
Some expenses are excluded from the eTIMS invoice requirement, including certain items such as salaries and wages, imports, interest and certain financial institution fees.
The practical lesson for a business owner is simple:
Don't just collect receipts. Keep proper financial records and understand which expenses require electronic tax documentation.
eTIMS and stock management
For businesses that sell physical goods, eTIMS is becoming increasingly connected to inventory management.
In a September 2026 public notice, KRA stated that taxpayers engaged in business are required to maintain accurate and up-to-date stock records while using TIMS/eTIMS.
The records should account for goods that are:
- Purchased or received
- Sold
- Transferred
- Returned
- Adjusted
- Otherwise disposed of
KRA says the stock records should support compliance with tax obligations and improve the accuracy of tax returns and reporting.
For retailers, wholesalers and other inventory-based businesses, this is an important reason to make sure your sales, purchases and stock records are properly connected.
Your books should be able to answer a basic question:
If I bought 100 units and sold 70, where are the remaining 30?
Good inventory records make that question much easier to answer.
Common eTIMS mistakes SMEs should avoid
The technology itself is rarely the biggest problem.
The bigger issue is often how the business uses it.
1. Treating eTIMS as separate from your accounting
Your invoices, bank transactions, sales records and accounting records should tell the same story.
If they don't, investigate the difference.
2. Waiting until tax-filing time
Trying to reconstruct several months of invoices and expenses at the last minute creates unnecessary work.
Keep your records updated throughout the month.
3. Ignoring cancelled or incorrect invoices
Errors happen.
When they do, follow the appropriate correction process instead of simply creating another invoice and leaving the original unresolved.
4. Mixing business and personal transactions
When personal spending is mixed with business transactions, reconciliation becomes harder and your financial records become less useful.
5. Failing to reconcile
Your eTIMS records should be periodically compared with your accounting records, sales records and bank activity.
6. Ignoring inventory records
If you sell physical goods, invoicing and stock management should not operate as completely separate processes.
7. Assuming small businesses don't need to comply
Business size does not automatically remove an eTIMS obligation.
If you are unsure, confirm your position rather than making assumptions.
A simple eTIMS checklist for your business
If you run a Kenyan SME, start with these questions:
- Is our business onboarded on eTIMS?
- Are we issuing electronic tax invoices correctly?
- Are our invoices consistent with our actual sales?
- Are our business expenses properly documented?
- Are our accounting records up to date?
- Are our bank transactions reconciled?
- Are our stock records accurate, if we hold inventory?
- Do we know how to correct an invoice when an error occurs?
- Are we keeping the relevant financial and tax records?
- Does our current invoicing system still work well as the business grows?
If several of these questions are difficult to answer, your business may need a closer review of its financial processes.
Should your business integrate eTIMS with accounting software?
For a very small business with relatively few transactions, a KRA-provided eTIMS solution may be sufficient.
As your business grows, however, manually managing invoices, accounting records, inventory and financial reports can become increasingly difficult.
At that point, it may make sense to consider an accounting or business-management system that integrates with eTIMS.
The goal should not simply be to automate invoicing.
The goal should be to create a reliable financial workflow where:
Sales → Invoicing → Accounting → Reconciliation → Reporting → Tax compliance
work together.
That gives the business owner better information for making decisions.
Final thoughts
eTIMS is now an important part of doing business in Kenya.
But compliance should not be treated as a once-a-year exercise.
Your invoices, expenses, stock records and accounting information form part of the financial picture of your business. The better those records are maintained, the easier it becomes to understand your business and meet your tax obligations.
For SMEs, the opportunity is to move beyond simply asking:
"Am I compliant?"
and start asking:
"Are my financial systems giving me reliable information about my business?"
That's where proper bookkeeping, accounting systems and financial advisory support become valuable.
AFI Solutions helps businesses put better financial processes in place—from bookkeeping and tax compliance to financial reporting and advisory support.
If you're unsure whether your eTIMS setup, bookkeeping process or financial records are working as they should, it may be time for a review.
