The Kenya Revenue Authority (KRA) has announced plans to implement further upgrades to its electronic Tax Invoice Management System (eTIMS) as part of a broader strategy to ramp up revenue collection and enhance compliance.
According to the taxman, its biggest potential bet to collect more taxes has been through the upgrades on the eTIMs, which have enabled it to increase revenue collection, specifically on the Value Added Tax (VAT).
Speaking at the African Development Bank’s VAT Digitization Seminar in Nairobi, Commissioner for Medium and Small Taxpayers George Obell said eTIMS has already proven to be a game-changer, significantly boosting VAT returns, sealing loopholes, and reducing fraud.
“The VAT system in Kenya is undergoing a revolution,” said Obell. “Our goal is for VAT to become the most reliable and highest-yielding tax head. VAT is paid by consumers — businesses are simply agents. When the system is misused, both the public and government lose.”
eTIMS enables real-time transaction monitoring, automatic rejection of unsupported deductions, and instant detection of fictitious invoices. According to the taxman, these features have tightened oversight of VAT returns and blocked fraudulent claims that previously went undetected.
The authority indicated that it will continue the innovations while expressing how the changes have helped it reject deductions that were initially not supported by declared transactions. This enabled KRA to seal common tax loopholes.
Further, KRA will leverage its inclusivity systems that have enabled it to develop a tiered approach to enable businesses to integrate directly with its systems.
This inclusivity is aimed at improving compliance across all segments of the economy, especially among small and informal businesses that have traditionally struggled with complex tax filing systems.
By offering mobile-friendly platforms like USSD and simplified digital interfaces, KRA hopes to bring more taxpayers into the formal net without overwhelming them with bureaucracy or technical barriers.
According to Commissioner Obell, the tiered system not only enhances accessibility but also increases transparency and accountability across the tax base. “You cannot have a one-size-fits-all system,” Obell explained. “We are building flexible solutions that are fit for purpose and aligned to business realities across the spectrum,” he said.
Additionally, he said that these reforms, among many others, have seen a 28 per cent increase in VAT revenue, driven by greater taxpayer visibility and a strengthened compliance framework.
The digitised system has also shed light on structural gaps, informing ongoing policy reviews on VAT thresholds and equity in the tax regime.
In May 2025, KRA collected Ksh32.14 billion in VAT — a strong 16 per cent increase year‑on‑year. By the end of Financial Year 2024/2025, KRA targets to collect Ksh2.704 trillion.
