eTIMS for small businesses: invoices, expenses and KRA's 2026 return checks

From 1 January 2026, KRA validates the income and expenses in every income tax return against electronic tax invoice data, starting with returns for the 2025 year of income. In KRA's words, all declared income and expenses must be supported by a valid electronic tax invoice "correctly transmitted with the buyer's PIN", subject to the exceptions in section 23A of the Tax Procedures Act and the Tax Procedures (Electronic Tax Invoice) Regulations, 2024 (KRA public notice).

In practice: a supplier's invoice that is not on eTIMS, or was issued without your PIN on it, is an expense iTax may not accept.

Who this affects

Every business that files an income tax return, VAT-registered or not. That includes sole proprietors, partnerships, companies, NGOs with taxable income and landlords who claim expenses. The check works in two directions:

• Your sales are compared with the eTIMS invoices you issued.
• Your local expenses are compared with the eTIMS invoices your suppliers issued with your PIN captured as the buyer (KRA user guide).

You may claim a lower expense than eTIMS shows, but not a higher one.

Expenses KRA excludes from the check

KRA's user guide lists these categories as outside the eTIMS validation:

• airline passenger tickets;
• emoluments (staff costs under PAYE) and direct wages;
• interest expenses and fees charged by financial institutions;
• imported goods, and imported services (including from non-residents without a permanent establishment in Kenya);
• expenses subject to a final withholding tax;
• investment and capital allowances and internal accounting adjustments;
• bad debts written off and provisions, depreciation, losses on disposal of assets, and exchange gains and losses.

Everything else bought locally, such as stock, rent, fuel, repairs, professional fees, stationery and transport, needs a valid eTIMS invoice with your PIN.

Worked example

For illustration, a small hardware shop reports these costs for the year (KES):

Expense	Amount	Needs an eTIMS invoice?
Stock bought from local wholesalers	6,000,000	Yes
Shop rent	600,000	Yes
Staff salaries under PAYE	1,200,000	No (emoluments)
Bank charges and loan interest	150,000	No
Depreciation	80,000	No
Total	8,030,000

If the eTIMS records with the shop's PIN show only KES 5,500,000 of stock and KES 600,000 of rent, iTax will support KES 6,100,000 of the KES 6,600,000 locally invoiced costs. The other KES 500,000 of stock is the gap to fix. At the 30% corporate rate, an unsupported KES 500,000 could cost up to KES 150,000 in extra tax.

Choosing an eTIMS option

KRA offers several ways to issue invoices (KRA):

• eTIMS Lite: web (via eCitizen), mobile app or USSD on *222#. Built for small and micro businesses not registered for VAT.
• Online portal at etims.kra.go.ke, and the downloadable eTIMS Client for shops with several tills or branches.
• System-to-system integration (OSCU or VSCU) for businesses whose accounting or point-of-sale software can send invoices to KRA automatically.

Where a supplier cannot issue invoices, such as a small farmer, Buyer Initiated Invoicing lets a registered buyer raise the invoice on the seller's behalf. The seller has 30 days to accept or reject it, and the system blocks this route for VAT-registered sellers (KRA).

What to do next

• Give your KRA PIN to every supplier and ask them to capture it on each eTIMS invoice.
• Check monthly, not at year end. Download your purchases from the eTIMS portal and match them to your books; chase missing invoices while suppliers still remember the sale.
• Use Buyer Initiated Invoicing for informal suppliers who cannot invoice.
• Book excluded expenses correctly in the return rows KRA specifies, so they are not claimed twice.
• Move invoicing into your accounting system if you issue many invoices; integration removes double entry.

Our Tax Health Check includes an eTIMS reconciliation of income and expenses before you file. For businesses that want invoicing, payroll and books on one system, RenolERP signs sales invoices on eTIMS automatically.

Sources

1. KRA public notice: Validation of Income and Expenses in the Income Tax Returns
2. KRA, Updated User Guide: Income and Expense Validations in Income Tax Returns
3. KRA, What are the solutions available on eTIMS?
4. KRA, Taxpayer guidelines on eTIMS Buyer Initiated Invoicing

General information, not professional advice. Rules change; check the sources above or ask us before acting. Last reviewed 9 Nov 2026.