At a recent industry forum in Nairobi, where the Kenya Association of Manufacturers (KAM), in partnership with DigiTax, hosted a high-level industry seminar on VAT compliance, manufacturers said the transition from the Tax Invoice Management System (TIMS) to eTIMS under the Kenya Revenue Authority has exposed operational weaknesses that are now translating into tax risks.
Participants cited real-time invoice validation requirements, intermittent system downtimes and difficulties integrating eTIMS with existing enterprise resource planning (ERP) and accounting systems as key stumbling blocks.
For many firms, compliance has shifted from a routine tax function to a daily operational challenge affecting procurement, supplier management and financial reporting.
Under the current validation framework, only expenses supported by properly transmitted eTIMS or TIMS invoices are recognised for tax purposes.
This means gaps in invoice transmission can prevent companies from claiming input VAT or deducting legitimate business expenses, effectively increasing their tax liability.
Thuku wa Thuku, Chief Operating Officer at DigiTax, said that nearly three years after rollout, awareness remains a major gap.
” Taxpayers were also not aware of the repercussions of not being eTIMS compliant tax complaint for that matter, whereby you might not necessarily be able to claim your expenses, which means you pay more taxes because you can’t offset your income verses expenses”, noted Thuku.
He also pointed to solutions in the market that do not adequately address user needs, leaving some businesses without sufficient technical support.
Manufacturers further raised concerns about supplier non-compliance, particularly within fragmented and informal value chains, where one weak link can disrupt the entire compliance chain.
With tax returns now cross-validated against eTIMS data alongside customs and withholding tax records, errors or omissions are more likely to trigger adjustments and penalties.
Industry players are urging more structured engagement and clearer guidance to address the operational gaps slowing full compliance.
