KRA ETIMS COMPLIANCE IN KENYA | SERPA ODOO ERP GUIDE

A finance manager closes December 2025 accounts, then finds that supplier expenses do not match the records KRA can validate. The invoices look legitimate, but some were not transmitted correctly and others lack the buyer PIN where it was required.

KRA eTIMS compliance now affects far more than VAT invoicing. For Kenyan businesses using Odoo, Odoo KRA eTIMS integration needs to be treated as a controlled tax implementation, not as a change to the invoice PDF.

As of October 2026, Kenya Revenue Authority, KRA, requires persons carrying on business to record sales, generate electronic invoices and transmit invoice information through the Electronic Tax Invoice Management System, eTIMS. The obligation also reaches non-VAT registered businesses. That point is where many implementation plans start on the wrong footing.

What KRA eTIMS is

KRA eTIMS is Kenya’s electronic invoicing platform. It captures sales invoice information for KRA and supports the electronic tax system requirements under section 23A. The system also requires stock-in and stock-out records, which means the control point extends beyond the accounts receivable team.

A compliant process has to answer four operational questions:

1.       How will each sale be invoiced and transmitted? KRA needs electronic invoice data, not merely an invoice number generated by an internal system.

2.       How will stock movements be recorded? Section 23A covers stock-in and stock-out records because invoice reporting without inventory movement data leaves material gaps for trading businesses.

3.       How will buyer details be captured? The buyer PIN matters where applicable, particularly when the customer needs expense or input-tax support.

4.       How will exceptions be controlled? Payroll, imports, investment allowances, interest and airline passenger ticketing are among the statutory exclusions from the electronic invoice required to ascertain tax liability. The finance team still needs an auditable basis for applying an exclusion.

KRA’s principal eTIMS portal is etims.kra.go.ke. The platform has been in force under the current legal framework since 28 March 2024, while KRA’s onboarding of non-VAT taxpayers took effect from 1 September 2023.

The distinction matters. A business can be below the VAT registration threshold and still have an eTIMS obligation because it is carrying on business.

Which Kenyan businesses must comply with eTIMS?

The practical answer is broad: every person carrying on business must comply, including non-VAT registered persons. There is no general turnover threshold that removes the eTIMS obligation.

The Commissioner may provide an exemption under section 23A or through a Gazette notice. Unless your business has a specific exemption that applies to its activities, assume eTIMS is required and document any contrary advice.

The KES 5 million misunderstanding

The KES 5,000,000 annual turnover figure is often quoted as though it were an exemption threshold. It is not.

KRA uses the KES 5 million annual-turnover limit as an eligibility criterion for the mobile eTIMS solution aimed at small and micro taxpayers. It does not remove the wider duty to use eTIMS. A director who hears “we are below KES 5 million” should ask one more question: “Below KES 5 million for which eTIMS route?”

| Business situation | eTIMS implication | Practical route to assess | | Non-VAT registered trader | eTIMS still applies because KRA includes non-VAT businesses | eTIMS Lite, Online eTIMS or another suitable route | | Small or micro taxpayer within KES 5,000,000 annual turnover | The mobile route may be available, but this is not an exemption | eTIMS Lite through eCitizen or USSD | | Business issuing invoices from Odoo | Invoice data needs a system-to-system compliance design | OSCU or VSCU integration | | Multi-branch or multi-entity group | Each operating entity needs clear invoice, stock and access controls | A localised ERP design with entity-level governance |   KRA offers eTIMS Lite through eCitizen or USSD for eligible non-VAT small and micro taxpayers, plus eTIMS Client, Online eTIMS, OSCU and VSCU routes. The choice should follow transaction volume, inventory complexity, approval controls and whether an existing ERP already creates invoices.

If your business invoices from spreadsheets or a counter-sales device and has low transaction volume, do not begin with a custom ERP integration. Assess the available KRA routes first. If Odoo is already the billing and inventory system, duplicating every invoice manually in another application is a weak control and creates avoidable reconciliation work.

The 2026 compliance trigger: income and expense validation

From 1 January 2026, KRA began validating 2025 income-tax-return income and expenses against TIMS or eTIMS data, withholding-tax information and Customs data. This has moved eTIMS from a sales-invoicing project into a year-end tax evidence issue.

For expenses, invoices must be valid and transmitted, with the buyer PIN where applicable, subject to statutory exceptions. A supplier invoice that looks correct in a PDF folder may not support a deductible expense if its eTIMS record is missing or defective.

Consider a Kenyan wholesaler whose finance officer keeps supplier invoices in separate email folders. The team mistakenly assumes that a modest turnover removes the need for eTIMS. During tax-return preparation, it discovers that turnover affects eligibility for a particular mobile solution, not the wider obligation to comply. The business now faces avoidable rework across sales, purchases and stock records. Selecting the appropriate eTIMS route early and validating supplier invoices can strengthen tax evidence, improve visibility and reduce last-minute reconciliation pressure.

The most common mistake is treating eTIMS as a task for the sales ledger alone. Procurement must be involved because supplier invoice quality affects expense support. Warehouse teams must be involved because stock-in and stock-out records are part of the requirement. IT must be involved where invoice data originates in Odoo or another business system.

A step-by-step eTIMS compliance plan

Step 1: Confirm the legal scope of each entity

List every Kenyan legal entity, branch, outlet and revenue stream. Identify whether it carries on business and whether a documented section 23A or Gazette exemption applies.

Do not use VAT status as the starting filter. KRA expressly includes non-VAT taxpayers, so VAT registration alone is not a valid eTIMS scope test.

Step 2: Map the invoice and stock data flow

Follow a sale from quotation through order, delivery, invoice, payment, credit note and stock movement. Then do the same for purchases.

The step everyone skips is credit notes and returns. A business may transmit original invoices correctly but leave reversals or stock adjustments outside the process, producing mismatches between sales, inventory and the general ledger. For an auditable result, document who creates each record, who approves corrections and where the final eTIMS reference is retained.

Step 3: Select the right KRA route

Use the route that fits how the business actually operates:

●        eTIMS Lite via eCitizen or USSD may suit eligible small and micro non-VAT taxpayers.

●        eTIMS Client and Online eTIMS may suit businesses that can work directly in KRA-supported tools.

●        OSCU or VSCU integration is the route to assess where the business needs its own billing system to exchange data with eTIMS.

KRA’s 27 February 2025 upgrade introduced self-onboarding, concurrent use of multiple eTIMS solutions, consolidated invoice access in the taxpayer portal and the option for system-to-system users to integrate with more than one third-party integrator. That flexibility helps, but it does not remove the need to define which system is authoritative for each transaction type.

Step 4: Build buyer PIN controls into the process

Define when a buyer PIN is required, where staff capture it and how the system validates incomplete records before final posting. Train counter-sales and accounts receivable staff on the actual field, not just the policy statement.

A buyer may ask for a business invoice after payment has already been taken. If the PIN is captured only after the invoice is finalised, staff need a controlled correction process. Otherwise, the customer may hold an invoice that cannot support the intended tax treatment.

Step 5: Test exceptions, returns and integration failures

Test ordinary sales, cash sales, credit customers, credit notes, cancelled orders, stock returns and periods of lost connectivity. Retain evidence of test results, configuration decisions and any KRA-required certification or approval steps for the system-to-system route.

Official Odoo documentation states that Odoo invoices are submitted through an OSCU integrated with the Trader Invoicing System. This is why an Odoo implementation needs interface design, testing and governance. It is not simply a tax-localised invoice layout.

Step 6: Reconcile monthly, not only at return time

Reconcile Odoo sales, eTIMS submissions, stock movements, credit notes and the tax ledger each month. Review supplier invoices before approving payment or posting material expenses, particularly where a buyer PIN should appear.

This creates real-time visibility of exceptions while source documents and operational context are still available. Waiting until the income tax return is due makes each mismatch slower to resolve.

What Odoo integration changes

Odoo can provide a unified source for billing, inventory, procurement and accounting, but only if the implementation defines the compliance controls around it. For a Kenyan company, the integration scope should include more than outgoing customer invoices.

| Control area | What the Odoo design should address | Why it matters for eTIMS | | Customer master data | PIN capture rules and validation ownership | Buyer information may be needed to support valid invoice treatment | | Invoice lifecycle | Posting, corrections, credit notes and cancellation controls | KRA-facing data must reflect the final commercial transaction | | Inventory | Stock-in, stock-out and return process mapping | Section 23A includes stock movement records | | Integration monitoring | Failed submissions, retries and exception queues | An invoice created in Odoo is not proof of successful transmission | | Multi-entity access | Entity, branch and user permissions | Groups need visibility without mixing records across legal entities | | Audit evidence | Submission references, logs and reconciliation reports | Finance and auditors need evidence beyond a printed invoice |   Consider a Nairobi distributor operating several outlets with Odoo managing sales and inventory. Its initial plan is for staff to re-enter invoices into a separate eTIMS screen at the end of each day. That creates risks of missed credit notes, duplicate entries and inconsistent records. A properly designed system-to-system integration can reduce repetitive handling, improve invoice traceability and give finance clearer visibility of exceptions. The business should still test connectivity failures, assign responsibility for exceptions and include warehouse returns before go-live.

For enterprises, the return on investment is not limited to reduced rekeying. It comes from a more auditable process, better real-time visibility of invoice exceptions and fewer late reconciliations across entities and outlets. Those outcomes depend on process ownership as much as technical integration.

Penalties and board-level risk

Failure to comply with an electronic-tax-system requirement can attract a penalty of twice the tax due. KRA must first issue written notice and find the taxpayer’s reasons unsatisfactory.

That is a serious exposure, but the more immediate board concern is control failure. An organisation can lose confidence in reported revenue, expense evidence and stock data when its ERP, eTIMS records and tax return support do not reconcile.

Ask management for a monthly dashboard that shows submitted invoices, failed or pending transmissions, credit-note exceptions, buyer PIN exceptions, stock movement differences and supplier invoice exceptions. This makes eTIMS a measurable compliance control rather than an annual tax scramble.

Frequently Asked Questions

Does KRA eTIMS apply to non-VAT registered businesses?

Yes. KRA states that eTIMS applies to every person carrying on business, including non-VAT registered businesses. VAT status does not create a general exemption.

Is the KES 5 million turnover figure an eTIMS exemption?

No. KES 5,000,000 annual turnover is an eligibility criterion for the mobile solution for small and micro taxpayers. It is not a general threshold that removes the eTIMS obligation.

Can we use Odoo for KRA eTIMS compliance?

Yes, where the implementation follows the system-to-system route and the required OSCU or VSCU integration design, testing and controls are in place. Odoo’s official documentation describes invoice submission through an OSCU integrated with the Trader Invoicing System.

What supplier invoice checks should finance perform in 2026?

Check that invoices are valid and transmitted, and that the buyer PIN is present where applicable. KRA began validating 2025 income and expenses against TIMS or eTIMS, withholding-tax and Customs data from 1 January 2026, subject to statutory exceptions.

KRA eTIMS compliance should be designed around the transactions your business actually processes, with reliable invoicing, stock records and tax evidence. SERPA helps Kenyan businesses assess Odoo integration readiness, strengthen controls and simplify reconciliation. Contact SERPA through our Odoo KRA eTIMS integration hub to discuss your needs and request a tailored quote.