Penalties for not using eTIMS or e-filing in Kenya
The penalty a Kenyan company or individual faces for not using e-invoicing, e-filing or e-payment, and the records that show each duty was met.
By Achekam · · 4 min read · For Running a business businesses in Kenya
Launching soon. Some of the screens this article describes for Nigerian and Kenyan businesses are not reachable in Achekam yet. They are coming soon.
Kenya has spent several years moving tax onto electronic rails: invoices through eTIMS, returns on iTax, payments against a payment registration number. The Finance Act 2026 attached a specific penalty to not using them, and it is large enough that a small business can feel it.
This article explains the penalty for companies and for individuals, the three duties it covers, and the records a business should keep to show that each duty was met. It also sets out where Achekam's records help and where the work stays with you, on KRA's own systems.
The penalty for a company
Under the Finance Act 2026, failing to use e-invoicing, e-filing or e-payment costs a company the higher of 5% of the tax or KES 100,000.
The "higher of" matters. For a small company, 5% of the tax involved may be modest, but the penalty never falls below KES 100,000, so it is the minimum that usually bites. KRA summarises the Act's changes to income tax, VAT, excise and tax procedures, with effective dates and what taxpayers need to do, in Finance Act 2026: what it means for you. Read it alongside your tax adviser's view of how the penalty is applied in practice.
The penalty for an individual
For an individual, such as a sole trader or a professional in practice on their own account, the penalty is KES 10,000. Lower, but still a cost that a few minutes of discipline would have avoided.
Three duties: e-invoicing, e-filing and e-payment
The penalty covers three separate duties, and a business can meet two and still fail the third:
| Duty | What it means | Where it happens |
|---|---|---|
| E-invoicing | Issuing electronic tax invoices through KRA's eTIMS, and keeping stock records | An eTIMS channel |
| E-filing | Filing returns electronically | iTax |
| E-payment | Paying tax electronically against a payment registration number | A bank, or M-Pesa to the government paybill |
Under section 23A of the Tax Procedures Act, every business in Kenya must issue electronic tax invoices through eTIMS and keep stock records. A few kinds of income are excluded, including employment income, imports, interest, airline tickets and payments subject to withholding tax. Which transactions need an eTIMS invoice goes through the exclusions in detail.
Showing each invoice went through eTIMS
The best defence against an e-invoicing penalty is evidence for every sale. Without a live eTIMS connection, a Kenyan business using Achekam issues each invoice through another eTIMS channel, such as eTIMS Lite, eTIMS Client or an approved integrator, and records the control-unit invoice number, the internal data and the receipt signature in Achekam. A second person verifies them, and only then does the invoice count as fiscalised.
Achekam prints the eTIMS identifiers on an invoice only once it is fiscalised; otherwise the document says it is not yet fiscalised. And its Kenyan VAT return lists the period's invoices, credit notes and till sales that are not fiscalised, without blocking the return. That list is the early warning: anything on it is a sale with no recorded eTIMS evidence. Clear it every month, before the return is filed. The full routine is in issuing eTIMS invoices and recording them.
Filing on iTax and paying with a PRN
E-filing and e-payment happen on KRA's systems, not in Achekam.
Filing. Achekam does not file Kenyan returns. A person with the business's KRA filing permission files on iTax and uploads the acknowledgement, and a different person verifies it before the return counts as filed in Achekam.
Paying. Kenyan tax is paid with the PRN from an iTax payment slip, at a bank or by M-Pesa to the government paybill 222222 with the PRN as the account number. The old paybill 572572 is discontinued. Achekam records a tax payment with the authority's own reference and receipt, never generates a payment reference itself, refuses the discontinued paybill, and needs a second person to confirm the payment. Paying Kenyan tax with a PRN explains the payment slip step by step.
Where businesses usually slip
Most failures are not deliberate. They are gaps in a routine:
- a sale made while the eTIMS channel was unavailable, written on a paper receipt and never put through eTIMS afterwards;
- a credit note issued in the books but not through the same eTIMS channel as the original invoice;
- a return prepared on time but never actually submitted on iTax, because the person with access was away;
- a payment made to the old paybill, or without the PRN as the account number, so it is not matched to the tax it was meant for.
Each of these leaves a trace in your own records if you look for it at month end.
Where Achekam's records help
Put together, the records give you a file for each period that answers the three questions a KRA officer would ask:
- Was every sale invoiced through eTIMS? The fiscalised invoices with their verified identifiers, and an empty not-fiscalised list on the VAT return.
- Was every return filed electronically? The iTax acknowledgement for each return, uploaded and verified by a second person.
- Was every payment made electronically? The PRN and receipt for each payment, recorded and confirmed by a second person.
What Achekam does not do is just as important. It does not transmit invoices to eTIMS for you today, it does not file on iTax, and it does not pay KRA. Those steps stay with named people in your business.
A monthly habit
Set aside an hour at each month end: clear the not-fiscalised list, check that every return due was filed and verified, and match every tax payment to its PRN and receipt. A month with all three in order is a month with no exposure to this penalty.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
