Small Businesses Exempted from Electronic Tax Invoice (eTIMS)

Small businesses with a turnover of less than Ksh. 5 million are now exempt from using the Electronic Tax Invoice Management System (eTIMS). The Kenya Revenue Authority (KRA) says it is working on a new platform that is specifically designed to meet the needs of small businesses.

The final regulations that provide guidelines on the implementation of the Finance Act of 2023, which amended Sec 23A and Sec86 of the Tax Procedures Act to make eTIMS onboarding mandatory, have now been gazetted.

Electronic Tax Invoice (eTIMS) Key Points

• Businesses with an annual turnover of less than KES 5.0M are no longer required to use eTIMS for generating invoices.
• Businesses subject to withholding tax as a final tax are also exempted from using eTIMS for invoice generation.
• Foreign suppliers, as well as services offered by non-resident individuals without a permanent establishment in Kenya, are now exempt from eTIMS.
• Any resident business where withholding tax is the final tax is not obligated to generate eTIMS invoices.
• Certain transactions, such as emoluments, imports, and specific services, are not covered by the electronic tax invoicing requirement.

All other businesses generating over 5 million unless exempted by KRA are required to generate eTIMS invoices in order to claim expenses when filing tax returns.