KRA Links eTIMS With IFMIS: New Invoice Rules for State Suppliers

KRA has announced that the electronic Tax Invoice Management System (eTIMS) will now be linked directly to the Integrated Financial Management Information System (IFMIS), meaning all invoices submitted by state‑supplied vendors must be recorded in eTIMS before they can be processed in IFMIS. The change, which takes effect from 1 September 2026, adds a mandatory electronic verification step for every invoice that a government department receives.

What the compliance calendar is saying

The integration creates a single data flow: once a supplier uploads an invoice to eTIMS, the system validates the invoice number, tax identification number and VAT amount before transmitting the record to IFMIS, where the finance department can release payment.

The Kenyan tax calendar continues to revolve around fixed monthly and quarterly deadlines that every registered business must meet:

• Monthly PAYE, NSSF, SHIF and the Affordable Housing Levy (AHL): payable by the 9th of the following month through iTax. Late payments attract the standard KRA principal‑vs‑penalty treatment and interest.
• Monthly VAT: return due by the 20th of the following month, with the net tax payable on the same day. VAT input must be supported by a valid tax invoice that is also recorded in eTIMS.
• Withholding tax (WHT): agency remittance for management fees, professional fees, rent, dividends and interest, usually due by the 20th of the following month.
• Turnover Tax (TOT): 3 % of gross income for businesses with annual turnover between KES 1 million and KES 25 million, payable monthly or quarterly.
• Residential Rental Income Tax (RRIT): 7.5 % on gross rent for residential property earning KES 15 000–KES 4 million per month, with advance tax payable each quarter.
• Corporate income tax: provisional instalment tax due on the 20th of the 4th, 6th, 9th and 12th months of the accounting year; final self‑assessment due on the 20th of the sixth month after year‑end for limited companies.

Suppliers must ensure their eTIMS profile is active, that invoice PDFs meet the prescribed format, and that the KRA tax reference on each invoice matches the buyer’s PIN. Failure to do so will result in the invoice being rejected by IFMIS and the payment being delayed.

Taxpayers should verify each filing window against the current iTax dashboard and any Finance Act amendment that may affect their accounting year.

Compared with what is normal

The anchor dates – the 9th for PAYE/NSSF/SHIF/AHL and the 20th for VAT, WHT and corporate instalments – have remained unchanged for a decade. What has shifted are the rates and the electronic invoicing requirement. The NSSF contribution scale is now tiered, SHIF is set at 2.75 % of gross pay, and the AHL remains at 1.5 % for both employee and employer. More importantly, the eTIMS‑IFMIS link means that paper‑only invoices can no longer be used to claim input‑VAT; every invoice must exist in eTIMS before IFMIS will approve payment.

The 2.75 % SHIF rate applies to gross salaries before any statutory deductions, while the AHL of 1.5 % is split equally between employee and employer. NSSF contributions now follow a graduated schedule: 0 % for earnings up to KES 1,200, 6 % for earnings between KES 1,200 and KES 18,000, and 10 % for earnings above KES 18,000, subject to the statutory ceiling.

KRA also cross‑checks WHT submissions against bank and M‑Pesa transaction data and can pre‑populate assessments when industry benchmarks suggest under‑reporting. A discrepancy between the amounts declared in eTIMS and the expected ratios triggers a higher audit likelihood.

Non‑compliance with the eTIMS requirement attracts a penalty of KES 5,000 per invoice, in addition to the standard VAT denial and interest charges on any under‑paid tax.

Tax Planning & Compliance — what this means for your books

Now for the business angle Beavoren cares about. A compliance shift is a leading indicator of penalty risk, input-VAT recoverability and cashflow timing — not just a filing date.

• Penalty and interest exposure. Late PAYE/VAT draws 25% penalty plus 1% per month compound interest; recognize a provision under IAS 37 the month a return is late rather than waiting for the demand.
• Input-VAT and eTIMS. Input-VAT claims now need a matched eTIMS invoice; an unrecorded supplier invoice is a recoverable-VAT loss, not a tax footnote — reconcile supplier eTIMS records to your purchase ledger monthly.
• Provisional instalment accuracy. Corporates pay in four instalments; underpaying instalment tax crystalises interest on the shortfall — re-estimate quarterly against actuals, not only at year-end.
• Payroll cost lines. NSSF, SHIF and AHL are employer cost lines that flow through payroll; keep them mapped to expense correctly so the management accounts match the iTax remittance.

Practical steps

• Pin the current year’s iTax filing calendar (9th/20th anchors) for every tax head you remit and set auto-reminders one week ahead.
• Reconcile supplier eTIMS records to your purchase ledger monthly so every input-VAT claim is defensible at the next KRA audit.
• Re-estimate provisional instalment tax each quarter against actual year-to-date profit, not only on last year’s figure.
• Recognize a late-filing penalty provision in the month a return is late rather than at year-end.
• Confirm NSSF tier, SHIF 2.75%, AHL 1.5% and any PAYE band change in your payroll software before the next run.
• Alert your accountant the week a Finance Act update drops, not the week a filing rejects.

Need help with compliance? Email info@beavorenventures.co.ke or call +254 716 296 857.

Disclaimer: This article is informational and does not constitute formal tax, audit or legal advice. For guidance specific to your circumstances, please contact Beavoren Ventures.