Businesses are bracing for a series of compliance challenges as the Kenya Revenue Authority (KRA) moves to enforce stricter income and expense validation rules from January 2026.
- •According to a tax alert issued by PwC, the new framework will require taxpayers to ensure that all claimed expenses are backed by electronic tax invoices transmitted through eTIMS.
- •The alert points out that “non-compliance by some government entities that procure services from taxpayers” may complicate efforts by businesses to reconcile their records.
- •Timing issues are also expected to pose obstacles, with the analysis warning of “timing mismatches between accounting periods and eTIMS invoices issuance,” a factor that could lead to disputes during tax return validation.
“Expenses must be supported by valid electronic tax invoices transmitted with the buyer’s PIN,” the advisory notes, adding that only items specifically exempted under the law will qualify without such documentation.
However, readiness across sectors remains uneven. The document highlights challenges for “Micro, Small and Medium Enterprises facing infrastructure and system limitations,” which could delay full migration to eTIMS.
Further, many suppliers remain ill-prepared due to “limited awareness and technical capacity… regarding eTIMS requirements,” potentially exposing businesses to gaps in documentation.
PwC cautions that the new measures may raise compliance demands, stating: “This directive is also likely to increase the compliance burden… and raise the cost of doing business for those engaging with non-eTIMS-compliant suppliers.”
