KRA-IFMIS Link: New eTIMS Payment Rules for Government Suppliers

The Kenya Revenue Authority (KRA) has completed its integration with the Integrated Financial Management Information System (IFMIS), activating new electronic Tax Invoice Management System (eTIMS) payment rules that apply to every supplier delivering goods or services to the government. The change, effective from 1 September 2026, requires all invoices to be uploaded to eTIMS before a payment can be processed, and ties each transaction to the supplier’s iTax profile for real‑time compliance monitoring.

What the compliance calendar is saying

The standard KRA filing schedule remains anchored to fixed monthly and quarterly dates, but the eTIMS link adds a verification step for each payment.

• Monthly PAYE, NSSF, SHIF and Affordable Housing Levy (AHL): due by the 9th of the following month via iTax; missed deductions attract penalties and interest.
• Monthly VAT: return due by the 20th of the following month, with net tax payable the same day; VAT inputs must be supported by a valid eTIMS invoice.
• Withholding tax (WHT): agency remittance on management fees, professional fees, rent, dividends and interest, typically 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 as chosen.
• Residential Rental Income Tax (RRIT): 7.5 % on gross rent for residential properties earning between KES 15 000 and 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.

Compared with what is normal

The anchor dates (9th for PAYE/NSSF/SHIF/AHL and 20th for VAT, WHT and corporate instalments) have not shifted in a decade, but two elements now increase compliance pressure. First, the rates that feed the calculations have been adjusted: the SHIF contribution is set at 2.75 % of gross pay, the AHL is 1.5 % for employees and matched by an equal 1.5 % contribution from employers, and the TOT rate remains at 3 % for eligible SMEs. Second, the eTIMS platform replaces paper‑only invoices; any invoice not recorded in eTIMS is rejected for input‑VAT claims, and KRA cross‑matches WHT payments against bank and M‑Pesa transaction data. When the system detects a mismatch between reported income and expected tax ratios, it automatically generates a pre‑filled assessment, raising the audit trigger for suppliers whose books do not align with the electronic record.

For government contractors and small‑to‑medium enterprises, the practical impact is twofold. Accurate, timely entry of each invoice into eTIMS becomes a prerequisite for cash flow, and the integrated data feed means that KRA can flag irregularities in near real time. Suppliers should therefore reconcile their accounting software with eTIMS daily, retain digital copies of all supporting documents, and monitor the iTax dashboard for any provisional assessments that arise from the automated matching process.

The new eTIMS rule also expands KRA’s ability to enforce the Affordable Housing Levy, which now requires a matching contribution from both employee and employer on every payroll processed through IFMIS. Failure to submit the levy through eTIMS triggers a penalty equal to 100 % of the unpaid amount, plus daily interest.

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.