The VAT Act of 2013 and the VAT (Electronic Tax Invoice) Regulations of 2020 and the Finance Act of 2023 provide the legal basis for electronic invoicing in Kenya.
Tax Invoice Management System (TIMS) is the assigned e-invoicing system in Kenya where all persons engaged in business must report every transaction to the Kenya Revenue Authority (KRA) in real-time. KRA is implementing TIMS to achieve validations and authentications of tax invoices before generation of invoice along with their real time or near real time transmission. TIMS is an information technology integration system that will integrate trader systems with iTax to monitor the generation of electronic tax invoices and their transmission through the internet to it.
The electronic tax invoice refers to an invoice generated from a compliant Electronic Tax Register (ETR) that has the ability to check the correctness of the invoice data generated at the time of making a sale through a process called validation. Also, the ETR will generate a unique QR code for each invoice that can be scanned to confirm the validity of the invoice. Once the invoice/receipt is generated and issued to the customer, the electronic version of the invoice, i.e. the electronic tax invoice will be transmitted to KRA over the internet on a real time or near real time basis.
The invoice data format is JSON. Each invoice issued must include a digital signature with the QR code. The archiving timeframe is 5 years.
- All taxpayers doing business including those who are not registered for VAT (non-VAT taxpayers) and fall under the Income Tax bracket are required to be on board on eTIMS as of 1st September 2023.
- Income expenditure or loss shall not be deductible if the invoices are not generated from an electronic tax invoicing system of 1st January 2024.
Onboarding onto eTIMS will continue until 31st March 2024. Once onboarded, the taxpayers will be required to progressively capture on eTIMS, all invoices and receipts issued manually from 1st January 2024 up to the date of onboarding. No penalties will be imposed on entities during the grace period for not issuing e-invoices.
