Companies in Kenya are preparing for heightened compliance requirements as the Kenya Revenue Authority (KRA) implements stricter income and expense verification rules from January 2026. A PwC tax alert notes that under the new framework, all claimed expenses must be supported by electronic tax invoices issued through eTIMS.
The advisory also highlights potential complications, including non-compliance by some government entities that procure services from businesses, which could make record reconciliation more difficult.
Timing issues are another expected hurdle. PwC warns of possible “mismatches between accounting periods and eTIMS invoice issuance,” which could lead to disputes during tax return validation. The advisory emphasises that only expenses supported by valid eTIMS invoices linked to the buyer’s PIN will be accepted, with exemptions limited to items explicitly allowed under law.
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Readiness across sectors, however, is uneven. Micro, Small, and Medium Enterprises (MSMEs) face infrastructure and system constraints that may delay full adoption of eTIMS. Many suppliers also lack awareness or technical capacity to meet eTIMS requirements, potentially leaving businesses with incomplete documentation.
PwC cautions that the directive is likely to increase compliance pressures and raise operational costs, particularly for firms dealing with suppliers not yet compliant with the eTIMS system.
