KRA eTIMS Kenya: Complete Electronic Tax Invoice Guide

What is KRA eTIMS and Why It Matters in 2026

Kenya has been one of the first East African countries to digitalise tax invoicing. Back in 2003, the Kenya Revenue Authority (KRA) rolled out TIMS (Tax Invoice Management System), a framework based on physical Electronic Tax Registers (ETRs). But this hardware-only model had clear limitations: high acquisition cost, complex maintenance, and an inability to keep pace with the growing semi-formal SME landscape.

In 2024, KRA generalised eTIMS (Electronic Tax Invoice Management System), a complete redesign that broadens the scope to every VAT-registered business, regardless of turnover, and introduces a multi-modal approach (software, web, mobile, hardware). The legal foundation rests on the Finance Act 2023 and the Tax Procedures Act CAP 469B, which now mandate the real-time transmission of every invoice to the KRA server before the document is delivered to the customer.

The model is real-time clearance: an invoice is pre-validated by KRA before it has any legal existence. Without that seal (Control Unit Information or CUIN + QR code), the invoice is invalid in the eyes of the tax authority — and the buyer cannot recover the VAT charged on it. This is a major paradigm shift for Kenyan SMEs: it is no longer possible to issue invoices off-system, even during temporary network outages (except under strictly framed degraded modes).

For SMEs, eTIMS is not just a regulatory constraint: it is also a treasury steering lever. Every validated invoice is timestamped and traceable, enabling real-time DSO tracking and accelerating VAT reconciliations. Conversely, any invoice rejected by KRA represents blocked cash flow — hence the importance of a robust, audited, natively integrated system.

The 4 eTIMS Deployment Modes: OSCU, VSCU, eTIMS Online and eTIMS App

One of eTIMS's strengths is its flexibility: KRA offers four complementary deployment modes, designed to fit the size, technological maturity and invoicing volume of each business. Choosing the right mode is a strategic decision that drives total cost of ownership and user experience.

1. OSCU (Online Sales Control Unit) — physical device for high volumes

OSCU is the direct heir of the ETRs from the TIMS era: a certified physical device connected to the cash register or management system, which transmits invoices to KRA in real time. It suits large structures (retail chains, hospitality, supermarkets) that issue thousands of receipts per day and require proven hardware reliability. Downsides: acquisition cost (between KES 30,000 and 80,000 depending on the model), maintenance, vendor lock-in.

2. VSCU (Virtual Sales Control Unit) — software integrated via API (CassKai's choice)

VSCU is the eTIMS revolution: a software layer that integrates directly into an ERP, a SaaS accounting platform or an existing invoicing system via a KRA-certified API. It is the preferred mode for modern SMEs: no hardware to buy, native integration, automatic updates. CassKai exclusively uses VSCU mode, which allows Kenyan SMEs to become compliant within hours, with no hardware investment.

3. eTIMS Online — KRA web portal for manual entry

For very small businesses that issue a few invoices per week, KRA provides a web portal where the user enters each invoice manually. Convenient for getting started, but not scalable: no accounting integration, no automatic export, no KPI monitoring (DSO, aging). Recommended only as a transitional solution.

4. eTIMS App — mobile for micro-merchants

Official KRA mobile application, designed for nomadic merchants, delivery riders, individual service providers. Enables issuing an eTIMS invoice from a smartphone, with optional Bluetooth printer support. Ideal for the informal sector transitioning to formalisation.

Side-by-side comparison:

For a structured SME running an accounting platform, VSCU is almost always the best choice: no hardware, no duplicate data entry, and automatic alignment between invoicing and accounting.

Legal Obligations and SME Compliance Checklist

For a Kenyan SME, eTIMS compliance is not limited to choosing a deployment mode: it entails a series of precise obligations codified by KRA and iTax. Here is the complete picture, structured for operational understanding.

VAT rates in Kenya (2026):

• 16%: standard rate applicable to most goods and services
• 8%: reduced rate on petroleum products
• 0%: exports and certain specific supplies (medicines, pharmaceutical supplies)
• Exempt: insurance, education, public health, core financial services

The PIN (Personal Identification Number): Every invoice issuer must hold an active PIN issued by KRA via the iTax portal. For B2B transactions, the customer's PIN must also appear on the invoice — it is a precondition for VAT deductibility on the buyer's side. If omitted, KRA may reject the deduction during an audit.

The 7 concrete obligations for every eTIMS invoice:

1. Real-time transmission: each invoice must be submitted to the KRA server before being delivered to the customer, except under explicitly authorised degraded modes.
2. Mandatory QR code and CUIN: the QR code encodes the unique Control Unit Information (CUIN) returned by KRA. Without a CUIN, the invoice is invalid.
3. Sequential numbering: every invoice carries a unique, sequential number, with no gap or duplicate. KRA controls this automatically.
4. Issuer AND buyer PIN (B2B): for any B2B invoice, both PINs must appear clearly on the document.
5. Currency reference: KES by default, but USD, EUR, GBP allowed for exports and international invoicing. The exchange rate must be stated for non-KES amounts.
6. 24-hour cancellation window: an eTIMS invoice may be cancelled via a dedicated API within 24 hours of issuance. Beyond that window, only a credit note is admissible.
7. Legal archiving for 5 years: eTIMS invoices must be retained for 5 years (Kenya's common-law duration, to be compared with 10 years in the OHADA zone — UEMOA), with the ability to restore them to KRA on demand.

Penalties for non-compliance: beyond the 5% turnover penalty per invalid invoice, KRA may block VAT credit refunds, demand retroactive reassessment, or even suspend the company's PIN in the most serious cases. eTIMS compliance is therefore not optional — it conditions the operational capacity of the business.

How CassKai Integrates with KRA eTIMS via VSCU

CassKai has made the architectural choice of VSCU (Virtual Sales Control Unit) mode for its KRA eTIMS integration. Concretely, this means that Kenyan SMEs using CassKai have no physical device to buy, no third-party software to install, and no duplicate data entry. The entire invoicing cycle — from data entry to KRA transmission to normalised PDF generation — takes place in a unified user experience.

The technical CassKai eTIMS workflow, step by step:

1. Draft invoice entry: the salesperson or accountant creates the invoice in CassKai (customer, items, VAT rate 16%/8%/0%, KES currency or other). At this stage, the invoice is in draft status and has no legal existence yet.
2. VSCU submission to KRA: on the click of "Issue", CassKai builds the payload compliant with the eTIMS specification (issuer PIN, buyer PIN if B2B, invoice lines, net/VAT/gross amounts, currency, exchange rate if applicable) and transmits it through the certified VSCU API.
3. KRA response: the KRA server validates the invoice, assigns it a unique CUIN (Control Unit Information), and returns a QR code encoding the verification elements (KRA URL + invoice identifier + digital signature).
4. Normalised PDF generation: CassKai assembles the final PDF including the CUIN, QR code, issuer and buyer PINs, mandatory legal mentions, and fiscal seal. This PDF is the legally enforceable version of the invoice.
5. Customer notification and archiving: the PDF is automatically sent to the customer (email or WhatsApp Business), and stored in encrypted legal archiving for 5 years in CassKai.

Customer onboarding: 5 minutes to compliance

1. Retrieve your KRA PIN via the iTax portal (business-side prerequisite)
2. Acquire the VSCU device key from KRA (single form, free)
3. Enter credentials in CassKai (Settings -> Country -> Kenya -> eTIMS)
4. Sandbox testing in CassKai (10 test invoices, visual QR validation)
5. Production go-live: effective from the first invoice issued

Native multi-currency support: CassKai natively handles KES, USD, EUR, GBP. For a Kenyan SME exporting to Europe or neighbouring EAC countries (Tanzania, Uganda, Rwanda), multi-currency invoicing is a single-step operation, with automatic calculation of the day's official exchange rate (source: Central Bank of Kenya).

PAYE, NSSF Tier I+II, SHIF and AHL: The Kenyan Payroll Quartet

Beyond eTIMS invoicing, a Kenyan SME must master another pillar of its compliance: payroll. Kenyan salary taxation underwent a major overhaul between 2023 and 2024, and any business leader must now navigate a quartet of social and fiscal obligations: PAYE, NSSF, SHIF and AHL. Here are the essentials.

PAYE (Pay As You Earn) — progressive income tax on wages

PAYE is the monthly income tax withheld at source. The 2026 brackets are:

• Up to KES 24,000/month: 10%
• KES 24,001 - 32,333: 25%
• KES 32,334 - 500,000: 30%
• KES 500,001 - 800,000: 32.5%
• Above KES 800,000: 35%

A personal relief of KES 2,400 per month is deductible for each Kenyan resident employee. PAYE returns are filed monthly via iTax, and the annual P9 declaration summarises all remuneration.

NSSF (National Social Security Fund) — social security Tier I + Tier II

Since the NSSF Act 2013 reform effectively applied in 2023, the NSSF contribution is structured in two tranches:

• Tier I: 6% of gross salary up to a Lower Earnings Limit (LEL) of KES 8,000, i.e. maximum KES 480 employee + KES 480 employer per month.
• Tier II: 6% of gross salary between KES 8,001 and KES 72,000 (Upper Earnings Limit, UEL), i.e. maximum KES 3,840 employee + KES 3,840 employer per month.
• Maximum NSSF employee total: KES 4,320/month (480 + 3,840). Same for the employer.

SHIF (Social Health Insurance Fund) — replaces NHIF since October 2024

SHIF, created by the Social Health Insurance Act 2023 and operational since 1 October 2024, replaces the historical NHIF. The contribution is 2.75% of gross salary, with no cap, borne exclusively by the employee. SHIF funds Kenya's new universal health insurance scheme (UHC, Universal Health Coverage).

AHL (Affordable Housing Levy) — housing tax since March 2024

The Affordable Housing Act 2024 introduced a new tax to fund the construction of affordable housing in Kenya:

• Employee: 1.5% of gross salary
• Employer: 1.5% of gross salary
• Cap: no cap, tax on 100% of gross

In total, for an employee earning KES 100,000 gross/month in 2026, the cumulative salary deductions (PAYE + NSSF Tier I+II + SHIF + AHL) can reach 35 to 40% of gross — a level of complexity that fully justifies an automated payroll module.

CassKai Kenya Payroll Module: CassKai natively handles progressive PAYE calculation, NSSF Tier I+II, SHIF and AHL, generates the P9 (annual employee summary) and P10 (monthly employer declaration) forms, and produces NSSF Monthly Returns in the format required by KRA. This eliminates calculation errors, speeds up payroll runs, and secures cash flow by avoiding late penalties.

Practical Roadmap: From Non-Compliance to Fully Digital in 30 Days

Here is the concrete trajectory we recommend to any Kenyan SME wishing to move from a paper/Excel invoicing process to a fully operational eTIMS system in 30 days, with CassKai as the foundation.

Week 1: KRA registration and assessment of current process

• Verify KRA PIN activation via the iTax portal (or apply for one if missing)
• Map the current invoicing process: who issues, in what format, how often, towards what types of customers (B2B vs B2C)
• Quantify monthly volumes and identify peaks
• Validate VAT registration and applicable rates (16%/8%/0%)
• Estimate the hidden cost of non-compliance (5% turnover penalty + manual data entry time)

Week 2: CassKai onboarding and IFRS chart of accounts mapping

• CassKai account creation and company configuration (NIF/PIN, KES currency, fiscal year)
• Chart of accounts import: CassKai provides a ready-to-use IFRS mapping adapted to Kenya
• Customer/supplier database import (with mandatory PIN for B2B)
• Bank account setup (KCB, Equity, NCBA, Co-op Bank — native connectors)
• Initial team training (2 hours via video with a CassKai Customer Success Manager)

Week 3: VSCU credentials and sandbox testing

• Request the VSCU device key from KRA (online procedure, usually 24-72h)
• Enter credentials in CassKai (automatic server-side encryption)
• Issue 10 test invoices in the KRA sandbox environment
• Visual validation: CUIN present, QR code scannable, legal mentions compliant
• Specific scenario tests: 24h cancellation, multi-currency invoice, anonymous B2C invoices

Week 4: production go-live and team training

• Switch to KRA production environment (sandbox -> production credentials)
• Issue the first real invoice, direct validation by the controller
• In-depth team training: sales (entry, tracking), accounting (VAT reconciliations), CEO (cash KPI dashboards)
• Configuration of proactive alerts (errored invoices, threshold breaches)
• Activation of DSO, customer aging, and treasury forecast dashboards

At the end of the 30 days, the company has a 100% eTIMS-compliant invoicing system, integrated with its IFRS accounting, with real-time treasury monitoring and zero duplicate data entry. The return on investment is measurable from the second month: DSO reduction of 5 to 15 days on average thanks to automated tracking, elimination of KRA penalties, and 10 to 20 hours per month freed up on the finance side.