eTIMS – The roadmap

e-TIMS is a free software-based solution that facilitates the generation of fiscalized invoices through the KRA Portal or by integrating an invoicing system to the eTIMS software. It can be operated on the customer’s native hardware such as mobile phones and computers. Allows for automatic reconciliation of returns and payments by transmitting invoices in real time to the KRA portal.Can be operated on the customer’s native hardware such as mobile phones and computers.

Key Changes

  • September 1, 2023, e-TIMS compliance became mandatory for all businesses, irrespective of their VAT registration status.
  • March 31, 2024, all businesses with an annual turnover of more than 5M are required to generate and transmit eTIMS compliant invoices.

Implications of eTIMS Changes

  • Businesses will still seek to work only with businesses that are eTIMS compliant, so that the expense incurred can be properly claimed as a business expense for tax purposes, despite businesses with an annual turnover of less than 5M being exempted from onboarding onto eTIMS.
  • Businesses that are not able to provide eTIMS compliant invoices may lose business.

eTIMS Exemptions
Section 23 A of the Tax Procedures Act exempts

  1. Emoluments such as salaries and wages;
  2. Imports;
  3. Investment allowances;
  4. Interest; and
  5. Airline passenger ticketing and similar payments.
  6. Fees charged by financial institutions
  7. Expenses subject to withholding tax that is a final tax
  8. Services provided by a non-resident person without a permanent establishment in Kenya
  9. Supplies by a resident person whose annual turnover is less than five million shillings
  10. Any other exclusion as may be provided under section 23A of the Act. The Commissioner may also, by notice in the Gazette, grant exemptions to specific individuals or entities.

Key Deadlines

The deadline for onboarding onto eTIMS was moved from 31 January 2024 to 31 March, 2024.
To meet the March 31, 2024 eTIMS onboarding deadline, businesses should target the following:

  1. Complete onboarding and install software by 15 March 2024
  2. Conduct testing on 31 March 2024
  3. Transition to e-TIMS invoices by 31 March 2024

How to Onboard

  • Await approval from KRA for the application.
  • Follow up on the installation and training process.
  • Sign up, fill out and submit the eTIMS Commitment Form, providing taxpayer
  • information and selecting the appropriate software solutions.

Documents Required

  • ID or passport of the director, owner or Legal representative of
  • the company or business (Should be listed on iTax)
  • Company’s CR12 or business registration certificate
  • Application letter
  • eTIMS Commitment form (All details provided including mobile number should match the details on iTax)

Penalties for non-compliance

  • Failure to comply with the regulations or tampering with the
  • system incurs a penalty of KES 100,000.
  • Additionally, a person not using eTIMS for invoice issuance will be ineligible to deduct expenses when calculating taxable income for corporation tax purposes.

Because businesses are still required to claim only expenses that are backed up with an eTIMS compliant invoice, they will only endeavour to work with businesses that are eTIMS compliant.
This makes it important to be eTIMS Compliant despite the 5M annual turnover threshold to avoid losing business.