Regulatory updates - Kenya

The Kenya Revenue Authority (KRA) has expanded its eTIMS guidance by introducing a dedicated section on reverse invoicing, providing further clarification on how the model should be implemented in practice. Reverse invoicing is primarily designed to support compliance in sectors with large numbers of small‑scale suppliers.

Clarified scope and applicability

The guidance confirms that reverse invoicing is intended for structured supply chains, particularly in sectors such as agriculture, where large buyers transact with multiple small suppliers. The model applies to scenarios where buyers generate tax invoices on behalf of suppliers through integrated systems connected to eTIMS.

Operational clarifications

The update provides more detailed guidance on how reverse invoicing should operate. It confirms that buyers must use a centralised Trader Invoicing System (TIS) capable of System‑to‑System integration with eTIMS. The invoicing process may involve issuing a sales invoice on behalf of the supplier and, where applicable, a separate invoice to account for commissions or service fees.

Roles and compliance responsibilities

KRA has clarified that buyers must be formally approved through a Know Your Customer (KYC) process before implementing reverse invoicing. Buyers remain fully responsible for the accuracy and compliance of invoices issued on behalf of suppliers. Suppliers must provide consent for the process, and buyers are required to maintain records of such consent and ensure suppliers receive notifications for each invoice issued.

Invoices must be issued in Kenyan Shillings, and the buyer must bear any costs related to reverse invoicing.

From May 2026, KRA will begin linking export transaction data captured in the Integrated Customs Management System (iCMS) with prefilled VAT returns. Only export data validated in iCMS and linked to the exporter’s Personal Identification Number (PIN) will be allowed in the prefilled VAT returns shown in iTAX.

The announced changes apply to exports to the Single Customs Territory, other foreign countries, Export Processing Zones (EPZs), and Special Economic Zones (SEZs).

On November 10, 2025, the Kenya Revenue Authority (KRA) issued a public notice announcing that, starting January 1, 2026, it will validate income and expenses declared in both individual and non-individual income tax returns. This validation will apply when filing returns for the 2025 year of income or accounting period via the iTax platform.

Declared income and expenses will be cross-checked against:

• TIMS/eTIMS records,
• Withholding income tax gross amounts,
• Import records from Customs.

All declared income and expenses must be supported by a valid electronic tax invoice, correctly transmitted with the buyer’s PIN where applicable.