What Businesses Must Know About eTIMS Before 2026
From January 2026, the Kenya Revenue Authority (KRA) will begin automatically validating income and expenses declared in tax returns using eTIMS data. Businesses will no longer be able to rely on informal records, as declared figures will be system-matched against KRA data. Understanding this shift is critical to future compliance.
Why Income and Expense Validation Matters Now
KRA’s automated validation aims to reduce revenue leakages and improve transparency. Declared income and expenses will be cross-checked against eTIMS invoices, withholding tax records, and import/export data. Any inconsistencies may lead to disallowed expenses, additional assessments, penalties, or audits.
What Is the Purpose of eTIMS in Income and Expense Validation?
eTIMS provides KRA with a verifiable audit trail for business transactions. Income will be validated using eTIMS sales invoices, while expenses will generally only be allowable if supported by valid eTIMS invoices. Unsupported or non-transmitted invoices may not be recognised for tax purposes.
Which Expense Categories Are Excluded from the Validation Process?
Certain expense categories are excluded from the eTIMS validation requirement and therefore do not require eTIMS invoices. These include:
- Salaries and wages
- Interest expenses
- Investment and capital allowances
- Imports and Services provided by a non-resident person without a permanent establishment in Kenya.
- Air passenger ticketing
- Fees charged by financial institutions.
- Expenses subject to withholding tax that is a final tax including rent payments to non-residents, qualifying interest, and other allowable expenses
- Any other exemption allowed by the commissioner
Understanding these exclusions helps businesses avoid unnecessary disallowances.
How Income and Expenses Will Be Validated
KRA systems will compare tax returns with eTIMS data. Expenses exceeding valid invoice support may be rejected, while undeclared income captured through eTIMS may trigger assessments. Businesses must ensure all sales and supplier invoices are properly invoiced and verifiable.
How to Verify an eTIMS Invoice
Businesses should verify invoices before payment by:
• Scanning the QR code on the invoice, or
• Using KRA’s online invoice verification portal
Only invoices successfully transmitted to KRA will be recognised.
Practical Steps to Prepare for Income and Expense Validation
Key preparation steps include:
• Confirming supplier eTIMS compliance
• Removing unsupported expenses
• Implementing buyer-initiated invoicing where applicable
• Training finance teams on invoice verification
• Conducting a tax health check
How a Tax Consultancy can assist in income & expenses validation process
Atlas Fiscal Solutions helps businesses prepare through eTIMS onboarding, supplier reviews, buyer-initiated invoicing structures, and tax health checks to ensure compliance with automated validation.
Key Takeaways
• From January 2026, income and expenses will be automatically validated using eTIMS
• Expenses must generally be supported by valid eTIMS invoices
• Some expense categories are exempt but still require proper documentation
• Early preparation reduces compliance risks
Book a consultation with Atlas Fiscal Solutions to evaluate your readiness for income and expense validation and ensure your 2025 tax returns are compliant ahead of the 2026 filing season.
