KRA eTIMS 2026: What Every Digital Seller Must Do Now
- KRA just made every un-invoiced online sale a liability — here's the number that matters
- What this means if your business turns over KSh 2M–20M per year
- Three moves smart Nairobi operators are making right now
- How AskBiz tells you exactly where your VAT exposure sits — before KRA does
- Warning signs your eTIMS compliance is already broken
- Your action plan before Friday
From 1 January 2026, KRA requires every e-commerce transaction to carry a verified eTIMS invoice — un-invoiced sales are now treated as undeclared income. KRA is also pushing to eliminate the KSh 5 million VAT registration threshold, meaning businesses of any size may soon be forced to charge 16% VAT. If your invoicing isn't eTIMS-connected this week, your tax deductions and your Tax Compliance Certificate are both at risk.
- KRA just made every un-invoiced online sale a liability — here's the number that matters
- What this means if your business turns over KSh 2M–20M per year
- Three moves smart Nairobi operators are making right now
- How AskBiz tells you exactly where your VAT exposure sits — before KRA does
- Warning signs your eTIMS compliance is already broken
KRA just made every un-invoiced online sale a liability — here's the number that matters#
From 1 January 2026, KRA's enhanced eTIMS system treats any e-commerce sale without a verified electronic invoice as potentially undeclared income. Not a warning. Not a grace period. Undeclared. That's the shift. The VAT rate on taxable goods and services stays at 16%. The Digital Service Tax (DST) for non-resident providers — think Meta ads, Google Workspace, Canva — stays at 1.5% of gross transaction value. What's new is the enforcement layer: KRA's automated reconciliation now cross-checks your eTIMS invoice records against M-Pesa Till receipts, Pesapal transaction logs, and your VAT return. If the numbers don't align, you're flagged before a human auditor ever looks at your file. There's a second pressure point. As of March 2026, KRA is actively pushing to remove the KSh 5 million annual turnover threshold for mandatory VAT registration. Right now, VAT registration is legally required at KSh 5 million. But KRA field officers are already registering businesses well below that figure. If you're doing KSh 2 million a year selling on Jiji, running a WooCommerce store, or taking orders via Instagram DM and collecting via M-Pesa, you are now on KRA's radar. For exporters, a separate update kicks in May 2026: KRA requires more granular documentation to validate zero-rated supplies. Fraudulent refund claims have cost the authority billions in recent years, so the bar for proving a zero-rated export is now significantly higher. Submitting a waybill alone won't clear you. The stakes are clear. Miss eTIMS integration and you lose the ability to deduct business expenses. Lose your Tax Compliance Certificate and you can't bid on tenders, open new business bank accounts at Equity or KCB, or renew county business permits.
What this means if your business turns over KSh 2M–20M per year#
Take a Westlands-based Shopify seller moving KSh 480,000 per month in skincare products — roughly KSh 5.76 million annually. Until late 2025, she was borderline on VAT registration and invoicing mostly via WhatsApp receipts and Pesapal confirmation emails. Neither of those counts as an eTIMS-verified invoice. Under the 2026 rules, every one of those transactions needs to push a verified invoice through eTIMS. If she has six months of un-invoiced sales on record, KRA's automated reconciliation will surface the gap when she files her next VAT return. The penalty for late or incorrect VAT filing is 5% of the tax due or KSh 10,000 — whichever is higher — plus 1% interest per month on the outstanding amount. On KSh 480,000 monthly revenue at 16% VAT, the exposure on a single month's uninvoiced sales is KSh 76,800 in uncollected VAT alone, before penalties. For a salon owner in Kilimani taking M-Pesa payments through a personal number rather than a registered Till, the exposure is different but equally real. KRA can subpoena Safaricom transaction records. Your M-Pesa statement is now effectively a tax document. Cross-border sellers face an additional layer. If you're buying stock from suppliers in China and selling into Kenya, your landed cost calculation must now account for the import VAT already paid at the port — and you need eTIMS-compliant purchase invoices to claim that input VAT back. Without them, you're paying VAT twice: once at Mombasa port and once when you file. Bottom line: the compliance cost of doing nothing is now higher than the cost of setting up eTIMS correctly. This isn't a future problem. The filing deadline for the period ending 30 June 2026 is already in sight.
Three moves smart Nairobi operators are making right now#
**1. Connect your sales channel to eTIMS this week — not next quarter.** KRA's eTIMS system has API integration for Shopify, WooCommerce, and point-of-sale tools. If you're on Shopify, the KRA eTIMS plugin pushes a verified invoice automatically at checkout. WooCommerce sellers can use the same API endpoint. If you're selling via Instagram or WhatsApp, you need to switch order confirmation to a platform that generates eTIMS invoices — Pesapal and iPay both have integrations. This is a one-time setup that takes roughly 3–4 hours with a developer. Do it before your next sale. **2. Register a business M-Pesa Till and link it to your KRA PIN.** Collecting payments on a personal Safaricom number is a paper trail you don't control. A registered M-Pesa Business Till (via Safaricom Business or through your bank) gives you transaction records that map cleanly to your eTIMS invoices and VAT return. Equity Bank and KCB both offer same-day Till registration for registered businesses. The monthly fee is KSh 0 on basic tills — the compliance benefit far outweighs any setup friction. **3. File your VAT return for June 2026 before the 30th — and reconcile eTIMS records first.** KRA's portal at itax.kra.go.ke shows your eTIMS invoice count against your declared sales. Log in now and check whether there are gaps. If your eTIMS invoice total is lower than your M-Pesa Till receipts for the same period, you have a reconciliation problem that will trigger an audit flag. Fix the gap before filing — not after. If you're not yet VAT registered and your turnover is approaching KSh 5 million, apply for registration proactively. KRA's push to lower the threshold means voluntary registration now is cleaner than forced registration later.
How AskBiz tells you exactly where your VAT exposure sits — before KRA does#
A Nairobi founder running a multi-channel electronics business — selling on Jiji, through a WooCommerce store, and via a physical Gikomba outlet — types this into AskBiz: "Which of my sales channels has the biggest gap between M-Pesa receipts and eTIMS invoices this quarter?" AskBiz connects to her WooCommerce store, her M-Pesa STK Push CSV export, and her Xero accounting file. Within seconds, the CFO Dashboard surfaces the answer: her Jiji channel shows KSh 214,000 in M-Pesa receipts with zero corresponding eTIMS invoices for April and May 2026. Her WooCommerce store is clean — eTIMS integration is running. Her physical outlet has 94% coverage but 6% cash sales with no invoice trail. The platform flags: "Your Jiji channel has KSh 214,000 in potentially uninvoiced revenue — at 16% VAT, your exposure is KSh 34,240 before penalties. Here's the eTIMS gap by month." She can now fix the Jiji channel invoicing before the 30 June filing deadline, rather than discovering the problem during a KRA audit six months later. That's the difference between a KSh 34,240 VAT payment and a KSh 34,240 VAT payment plus penalties, interest, and a damaged Tax Compliance Certificate. AskBiz's Growth plan starts at KSh 3,800 per month. One avoided penalty pays for eight months of the subscription.
Warning signs your eTIMS compliance is already broken#
Check these four signals this week: **Your eTIMS invoice count on iTax is lower than your M-Pesa Till statement for the same month.** Log into itax.kra.go.ke and compare. Any gap is a reconciliation risk. **You're still sending PDF invoices or WhatsApp receipts as your primary sales confirmation.** Neither is eTIMS-verified. KRA does not recognise them for input VAT claims or expense deduction. **Your business expenses include supplier invoices that aren't eTIMS-linked.** From 2026, expenses backed by non-eTIMS invoices are non-deductible. If your stock supplier in Gikomba is still issuing handwritten receipts, those costs may not reduce your taxable income. **You haven't received a VAT registration notice but your turnover is above KSh 3 million.** KRA's zero-threshold push means the window between 'not yet registered' and 'already flagged' is narrowing fast. Don't wait for a letter.
Your action plan before Friday#
**This week:** Log into itax.kra.go.ke and pull your eTIMS invoice report for April–June 2026. Compare it against your M-Pesa Till statement for the same period. If there's a gap of more than KSh 50,000, call your accountant today — not after the 30 June filing deadline. **Set up once:** Connect your primary sales channel (Shopify, WooCommerce, or POS) to KRA's eTIMS API. If you're on AskBiz's POS system, the M-Pesa Till integration already pushes eTIMS invoices automatically — no separate plugin needed. Register a business M-Pesa Till if you're still collecting on a personal number. **Track monthly:** Your eTIMS invoice coverage rate — total eTIMS invoices issued divided by total M-Pesa receipts received, expressed as a percentage. Target: 100%. Anything below 95% is a filing risk. Set a calendar reminder for the 20th of each month to check this before your VAT return is due on the 30th.
People also ask
Does my small business in Kenya need to use eTIMS in 2026?
Yes. From 1 January 2026, KRA requires all e-commerce sellers to issue verified eTIMS invoices for every transaction, regardless of size. KRA is also actively registering businesses below the KSh 5 million VAT threshold. If you're collecting payments via M-Pesa or any online channel, eTIMS compliance is no longer optional. Smart operators connect their Shopify or WooCommerce store to the KRA eTIMS API before their next sale.
What is the VAT rate for online businesses in Kenya 2026?
Kenya's VAT rate on taxable goods and services is 16%. Digital Service Tax (DST) for non-resident digital providers — such as Meta, Google, or Canva billing Kenyan users — is 1.5% of gross transaction value. Both rates are unchanged in 2026, but enforcement has tightened significantly through KRA's eTIMS mandate and automated reconciliation against M-Pesa and Pesapal transaction records.
What happens if I don't issue eTIMS invoices in Kenya?
Un-invoiced e-commerce sales are treated by KRA as potentially undeclared income from 2026. Beyond the income tax risk, expenses you cannot back with eTIMS-linked invoices are non-deductible, increasing your taxable profit. Late or incorrect VAT filing attracts a penalty of 5% of tax due or KSh 10,000 — whichever is higher — plus 1% monthly interest. You also risk losing your Tax Compliance Certificate, which blocks tender applications and business banking.
What is eTIMS and how does it work for Kenyan businesses?
eTIMS (Electronic Tax Invoice Management System) is KRA's platform for generating and verifying tax invoices in real time. Every time you make a sale, eTIMS assigns a unique invoice number that KRA can cross-check against your VAT return and M-Pesa Till receipts. Businesses integrate via API (for Shopify, WooCommerce) or use KRA's eTIMS app for point-of-sale. An invoice without an eTIMS verification code is not recognised by KRA for tax purposes.
How does AskBiz help Kenyan businesses with eTIMS VAT compliance?
AskBiz connects to your M-Pesa STK Push CSV exports, WooCommerce or Shopify store, and Xero or QuickBooks file, then compares eTIMS invoice records against payment receipts. It flags gaps — for example, 'KSh 214,000 in M-Pesa receipts with no matching eTIMS invoices, creating a KSh 34,240 VAT exposure' — so you fix discrepancies before your KRA filing deadline, not during an audit. Available from KSh 3,800 per month.
Carolyne Kigathi leads AskBiz's East Africa strategy, tracking regulatory shifts, mobile money trends, and SME growth signals across Kenya, Uganda, Tanzania, and Rwanda — and turning them into briefings founders can act on before their competitors notice.
Find out exactly where your eTIMS invoicing gaps are — before KRA does
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