Kenya Revenue Authority is connecting its eTIMS electronic invoicing system directly to M-Pesa and other payment channels, automating the link between a completed sale and its tax obligation — while replacing large portions of the legacy iTax platform.
Under the new setup, when a business completes a transaction through an M-Pesa-connected channel, eTIMS automatically generates a Payment Registration Number and settles the corresponding tax without a separate declaration. Businesses can submit invoice data through mobile apps, online portals, USSD services, or software integrations built into existing accounting tools. KRA is also using eTIMS data to pre-populate tax returns before submission, cutting manual entry for smaller operators. Commissioner George Obell said the package could lift overall compliance by 16%, with “improved cash flow for the government and reduced administrative burden for businesses.”
KRA is rebuilding iTax as an API-connected platform that can exchange data with banks, payment providers, and public agencies in real time via EAPI and GavaConnect integrations. The rebuilt infrastructure targets 99.8% availability on cloud-enabled or hybrid systems, a response to outages that have repeatedly disrupted submissions at filing deadlines. The authority is adding behavioural profiling and AI-supported risk monitoring to flag irregularities as transactions occur rather than during post-period audits. Audit workflows, refund processing, and case management are also being automated under the same upgrade to speed up internal review cycles.
The reforms are tied to a Treasury target to raise Kenya’s VAT-to-GDP ratio from 4% to 6%. Only around 250,000 companies are registered for VAT — mandatory only above Sh5 million in annual turnover — which KRA considers too narrow given the scale of commercial activity in the country. The Micro and Small Taxpayers unit, set up in 2024, has brought 511,000 businesses into the tax system and is targeting 320,000 more. Embedding compliance into M-Pesa’s payment rails is KRA’s bet on reaching informal traders who cannot manage conventional filing.
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