KRA Invoice Requirements: Complete Kenya Tax Compliance Guide

Operating a business in Kenya means complying with the Kenya Revenue Authority (KRA) regulations. With the introduction of the electronic Tax Invoice Management System (eTIMS, which replaced TIMS in late 2023), Kenya has become one of Africa's most digitally advanced tax jurisdictions, making it critical for businesses to understand and meet all invoicing requirements.

Understanding KRA and the Kenyan Tax Framework

The Kenya Revenue Authority was established in 1995 to enhance tax revenue collection. KRA administers all national taxes and is at the forefront of digital tax administration in East Africa.

The Kenya Revenue Authority was established in 1995 to enhance tax revenue collection. KRA administers all national taxes and is at the forefront of digital tax administration in East Africa.

Key taxes that affect invoicing include:

• Value Added Tax (VAT): 16% standard rate on most goods and services
• Reduced Rate: 8% on petroleum products
• Zero Rate: 0% on exports and certain essential goods
• Income Tax: Based on business profits (30% corporate rate)
• Withholding Tax: Deducted at source on certain payments
• Digital Services Tax: 1.5% on income from digital services

Mandatory Invoice Elements for KRA Compliance

Every tax-compliant invoice in Kenya must include:

Every tax-compliant invoice in Kenya must include:

1. Business name and address — your registered business name
2. KRA PIN — your unique KRA Personal Identification Number
3. VAT registration number — if registered for VAT
4. Customer details — name, address, and KRA PIN (for B2B transactions)
5. Invoice number — sequential and unique
6. Invoice date — the date of issue
7. Description of goods or services — clear and specific
8. Quantity and unit price — for each line item
9. Subtotal amount — before VAT
10. VAT amount — calculated at the applicable rate
11. Total amount payable — including VAT
12. KRA eTIMS QR and Control Unit Invoice Number for electronic verification

VAT Registration and Obligations

Businesses with annual taxable turnover exceeding KSh 5,000,000 (approximately USD 38,000) are required to register for VAT with KRA.

Businesses with annual taxable turnover exceeding KSh 5,000,000 (approximately USD 38,000) are required to register for VAT with KRA. Once registered, you must:

• Charge VAT at 16% on taxable supplies
• Issue VAT-compliant invoices through an eTIMS-compliant VSCU or OSCU channel
• File VAT returns monthly by the 20th of the following month
• Remit collected VAT to KRA
• Maintain records for at least 5 years

VAT Exemptions

Certain goods and services are exempt from VAT in Kenya, including:

• Unprocessed foodstuffs (fresh agricultural produce)
• Agricultural inputs and equipment
• Medical and pharmaceutical products and services
• Educational services
• Financial and insurance services
• Transportation of passengers by road

Always verify current exemptions on the official KRA website.

Record Keeping Requirements

KRA requires businesses to maintain comprehensive records for a minimum of 5 years.

KRA requires businesses to maintain comprehensive records for a minimum of 5 years. This includes:

• All issued invoices (sales)
• All received invoices (purchases)
• Bank statements and payment records
• Contracts and agreements
• Receipts for expenses
• VAT returns and payment confirmations
• TIMS transaction logs

Digital record-keeping is accepted and increasingly required. Using invoicing software ensures your records are organised, searchable, and audit-ready.

E-Invoicing and TIMS

Kenya has implemented one of Africa's most advanced e-invoicing systems through the electronic Tax Invoice Management System (eTIMS).

Kenya has implemented one of Africa's most advanced e-invoicing systems through the electronic Tax Invoice Management System (eTIMS). Key requirements include:

• Mandatory ETI devices: All VAT-registered taxpayers must use Electronic Tax Invoice (ETI) systems — either hardware devices or approved software
• Real-time validation: Every invoice is transmitted to KRA in real time for validation and receives a unique Control Unit number
• QR codes: Each invoice must contain a scannable QR code linking to KRA's verification system
• Buyer verification: The system validates the buyer's KRA PIN before the invoice is finalised
• No manual invoices: Hand-written or non-eTIMS invoices are not valid for VAT purposes

Businesses must ensure their invoicing software integrates with KRA eTIMS through the VSCU or OSCU channel and binds the KRA-issued Control Unit Invoice Number and QR to each invoice.

Common Compliance Mistakes to Avoid

Common Compliance Mistakes to Avoid includes: Missing KRA PIN on invoices — makes invoices invalid for tax purposes Not using eTIMS-compliant systems renders VAT invoices legally invalid

• Missing KRA PIN on invoices — makes invoices invalid for tax purposes
• Not using eTIMS-compliant systems renders VAT invoices legally invalid
• Incorrect VAT rate application — ensure you use 16% standard, 8% reduced, or 0% as appropriate
• Late VAT filing or remittance — attracts severe penalties
• Gaps in invoice numbering — raises audit red flags with KRA
• Not retaining records for 5 years — the minimum is strictly enforced
• Issuing invoices without QR codes is non-compliant under eTIMS regulations

Penalties for Non-Compliance

KRA imposes significant penalties for non-compliance:

KRA imposes significant penalties for non-compliance:

• Late filing of VAT returns: KSh 10,000 or 5% of the tax due, whichever is higher
• Late payment of VAT: 2% of the unpaid tax per month, compounding
• Failure to register for VAT: Fine of up to KSh 100,000 and/or imprisonment of up to 3 years
• Failure to use eTIMS: Additional penalties and potential deregistration
• Issuing non-compliant invoices: Assessment, back-taxes, and penalties
• Tax evasion: Criminal prosecution with substantial fines and imprisonment

How Invoicemonk Helps You Stay Compliant

Invoicemonk is designed with Kenyan tax compliance in mind.

Invoicemonk is designed with Kenyan tax compliance in mind. Our platform:

• Automatically includes all required invoice elements including KRA PIN
• Calculates VAT at the correct rate (16%, 8%, or 0%)
• Generates sequential invoice numbers with no gaps
• Stores invoices securely for 5+ years
• Provides audit-ready reports on demand
• Supports KES and multi-currency invoicing
• Integrates with M-Pesa and other Kenyan payment methods

Start your Pro plan and create KRA-compliant invoices in minutes.

Frequently Asked Questions

What is the current VAT rate in Kenya?

The standard VAT rate in Kenya is 16%. A reduced rate of 8% applies to petroleum products, and exports are zero-rated at 0%.

The standard VAT rate in Kenya is 16%. A reduced rate of 8% applies to petroleum products, and exports are zero-rated at 0%.

Do I need a KRA PIN to invoice in Kenya?

Yes, all businesses and individuals conducting business in Kenya must have a KRA Personal Identification Number (PIN). It is required on all tax-compliant invoices and official documents.

Yes, all businesses and individuals conducting business in Kenya must have a KRA Personal Identification Number (PIN). It is required on all tax-compliant invoices and official documents.

How long must I keep invoices and records?

KRA requires businesses to retain all financial records for at least 5 years from the end of the relevant tax period.

KRA requires businesses to retain all financial records for at least 5 years from the end of the relevant tax period.

What is KRA eTIMS and is it mandatory?

KRA eTIMS (the electronic Tax Invoice Management System that replaced the older TIMS in late 2023) is mandatory for every VAT-registered taxpayer in Kenya.

KRA eTIMS (the electronic Tax Invoice Management System that replaced the older TIMS in late 2023) is mandatory for every VAT-registered taxpayer in Kenya. Invoices must be transmitted to KRA in real time through an approved VSCU or OSCU channel, and each invoice must carry the KRA-issued Control Unit Invoice Number and signed QR.

What happens if I make a mistake on an invoice?

Issue a credit note through your eTIMS-compliant system referencing the original Control Unit Invoice Number, then create a corrected invoice. Never delete or alter issued invoices — this is a compliance violation.

Issue a credit note through your eTIMS-compliant system referencing the original Control Unit Invoice Number, then create a corrected invoice. Never delete or alter issued invoices — this is a compliance violation.