Supplier invoices without eTIMS: expenses at risk
Which supplier invoices put a Kenyan business's expense deductions and input VAT at risk under eTIMS, and how to find and fix them before year end.
By Achekam · · 4 min read · For Running a business businesses in Kenya
The year-end tax computation comes back from your accountant with a long list attached. Fuel from a roadside station, repairs by a local fundi, stationery from a shop down the road, a month of cleaning services. Each one is a genuine business cost, paid and receipted. Each one has been taken out of your expenses, and your taxable profit has gone up accordingly.
The reason is the same for all of them: the supplier did not issue an eTIMS invoice. Since Kenya tied tax deductions to eTIMS, the supplier's paperwork has become your tax problem. This article explains the rules at the time of writing, how KRA checks them, and how to find the invoices at risk in Achekam while there is still time to fix them.
Expenses need eTIMS invoices
Since 1 January 2024, Kenyan business expenses not supported by an eTIMS invoice are disallowed for income tax under section 16(1)(c) of the Income Tax Act. From the 2026 year of income, every expense needs an eTIMS invoice.
That is a big change for businesses that buy from small suppliers. A handwritten receipt, a till slip from a system not linked to eTIMS, or an invoice typed in a word processor may prove you paid, but it no longer supports the deduction.
Some payments fall outside eTIMS altogether. The law excludes employment income, imports, interest, airline tickets and payments subject to withholding tax from the requirement to issue eTIMS invoices, so you should not expect one for salaries, for example. Ask your accountant how each of those categories should be supported in your records.
KRA's own eTIMS questions and answers are worth reading alongside this article.
Input VAT needs TIMS or eTIMS invoices
For a VAT-registered business the risk is double. Since 1 June 2023, Kenyan input VAT can be claimed only against TIMS or eTIMS invoices. A supplier invoice without one costs you the expense for income tax and the input VAT on it.
KRA's cross-checks
From 1 January 2026, KRA checks declared income and expenses against eTIMS, withholding tax and customs data. In practice, KRA can compare the expenses in your return with the eTIMS invoices issued to you, and ask about the difference.
For 2025 returns there was a one-time concession allowing details of non-eTIMS expenses to be uploaded to iTax. Do not plan on it happening again. From here on, the safe assumption is that an expense without an eTIMS invoice will be found and questioned.
The list of supplier invoices with no eTIMS reference
Achekam lists a Kenyan business's supplier invoices that have no eTIMS reference recorded, so you can see which expenses risk being disallowed.
That list is only as good as your habits when you record supplier invoices. Make it a rule that whoever enters a supplier invoice also records its eTIMS reference at the same time, from the invoice itself. An invoice with a reference drops off the list; an invoice without one stays on it until someone deals with it.
Read the list every month, not once a year. Sort it by supplier: one regular supplier without eTIMS usually accounts for far more of the risk than a scattering of one-off purchases. A supplier you chase in March can still issue a proper invoice. A supplier you chase the following February may have closed, changed systems or simply stopped answering.
On the sales side, a separate check exists too: a Kenyan VAT return in Achekam lists the period's own invoices, credit notes and till sales that are not fiscalised, without blocking the return.
One more limit to know while you are entering supplier bills: in Achekam, supplier bills and purchase orders do not yet use a Kenyan business's own VAT rate. They offer 15% or 0% and default to 15%. Check the VAT on each bill against the supplier's eTIMS invoice and agree with your accountant how to record it correctly.
Chasing suppliers before year end
When the list shows an invoice without an eTIMS reference, work through these steps:
- Ask the supplier for an eTIMS invoice for the same supply. Many small suppliers can issue one through eTIMS Lite on their phone.
- Record the reference against the supplier invoice in Achekam as soon as it arrives.
- Keep a note of every request and reply, with dates.
- Decide about repeat offenders. A supplier who cannot or will not issue eTIMS invoices is costing you tax on everything you buy from them. Look for an alternative for regular purchases.
- Tell your accountant what is still on the list at year end, so the computation reflects it rather than discovering it.
| What the supplier says | What to do |
|---|---|
| "I will issue it now" | Wait, then record the reference |
| "I am not registered on eTIMS" | Explain that you cannot deduct the cost; consider another supplier |
| "That sale was too small" | Explain the rule applies to every expense |
| No reply | Follow up in writing and note the date |
And not every cost needs an eTIMS invoice: payroll is a different regime, explained in Kenyan payroll deductions and who collects them.
Open the list of supplier invoices without an eTIMS reference this week and send the first round of requests. Every invoice you fix now is an expense you keep.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
