NAIROBI, Kenya — The Kenya Revenue Authority (KRA) has granted businesses temporary relief by allowing taxpayers to declare legitimate business expenses that are not supported by electronic Tax Invoice Management System (eTIMS) invoices when filing their 2025 income tax returns.
The move, announced in a public notice on Monday, comes just weeks before the June 30 tax filing deadline and is expected to ease compliance challenges for thousands of businesses still transitioning to the digital invoicing system.
Under the temporary measure, taxpayers filing returns for the 2025 Year of Income will be allowed to include valid business expenses even where supporting invoices were not generated through eTIMS or the older Tax Invoice Management System (TIMS).
However, KRA cautioned that the expenses will not be automatically accepted and will instead be subjected to post-filing verification and validation.
Relief for businesses amid digital tax transition
The tax authority said the concession is intended to facilitate smooth filing during the current tax season as businesses continue adapting to the government’s expanding digital tax compliance framework.
“To facilitate smooth filing for the 2025 Year of Income, KRA has allowed taxpayers to declare valid business expenses that may not be supported by eTIMS/TIMS invoices. Such expenses may be uploaded during filing and will be subject to validation by KRA after submission,” the authority said.
The announcement is likely to be welcomed by businesses that have struggled with gaps in electronic invoice generation, supplier compliance issues, or transactions undertaken during the ongoing migration to fully digitised tax reporting.
Stricter rules from 2026
While offering temporary flexibility for the current filing period, KRA made it clear that the exemption will not extend beyond the 2025 Year of Income.
Beginning with the 2026 tax year, all income and expense claims will be required to be supported by valid electronic tax invoices generated and transmitted through eTIMS or TIMS platforms.
“From the 2026 Year of Income onwards, all declared income and expenses must be supported by valid electronic tax invoices generated and transmitted through eTIMS/TIMS,” KRA stated.
The directive signals the authority’s determination to strengthen tax compliance through technology-driven verification systems and reduce opportunities for tax evasion through unsupported deductions.
June 30 deadline remains unchanged
Despite the temporary concession, KRA reiterated that all taxpayers must file their 2025 income tax returns by June 30, 2026.
“The Kenya Revenue Authority reminds all taxpayers that filing of Income Tax Returns for the Year of Income 2025 is ongoing and must be completed by June 30, 2026,” the authority said.
Failure to comply within the prescribed timeline could attract penalties and enforcement action under the Tax Procedures Act.
For taxpayers filing nil returns, the late-filing penalty remains Ksh2,000, while other categories of taxpayers may face higher penalties depending on their circumstances.
KRA further warned that taxpayers who fail to file their returns risk being subjected to default assessments.
“Taxpayers who fail to file returns by June 30, 2026, will be subject to default assessments in accordance with Section 29 of the Tax Procedures Act,” the authority said.
Push towards automated compliance
The latest notice comes as KRA accelerates efforts to digitise tax administration and enhance compliance through automated data matching.
The authority has increasingly integrated eTIMS data with customs, VAT, and other tax systems to cross-check taxpayer declarations and identify inconsistencies in reported income and expenses.
Also Read: KRA rolls out real-time tax system linked to M-Pesa in major compliance overhaul
As part of its digital transformation agenda, KRA recently launched a WhatsApp-based taxpayer assistance platform known as Shuru, aimed at helping taxpayers verify obligations, access tax services, and complete filings more efficiently.
The authority has repeatedly stated that digital tax systems are central to improving revenue collection, reducing fraud, and creating a more transparent tax environment.
For businesses, the latest concession provides a temporary compliance cushion. However, it also serves as a warning that from 2026 onwards, tax deductions and expense claims will face significantly tighter scrutiny under Kenya’s increasingly automated tax enforcement regime.
