NAIROBI, Kenya — The Kenya Revenue Authority (KRA) is rolling out a sweeping, technology-driven overhaul of tax administration, introducing real-time compliance systems integrated with digital payments in a move expected to significantly reshape revenue collection and business operations.
At the centre of the reforms is an enhanced electronic Tax Invoice Management System (eTIMS), now being tightly linked to payment platforms such as M-Pesa, alongside a full modernisation of the long-standing iTax platform.
KRA officials say the shift marks a departure from traditional post-declaration enforcement toward real-time, transaction-based compliance, where taxes are effectively captured at the point of sale.
Commissioner for Micro and Small Taxpayers George Obell said the reforms are expected to boost overall compliance by up to 16 P.c, building on gains recorded over the past year.
Under the upgraded eTIMS framework, businesses will be required to transmit invoices instantly through web portals, mobile apps, USSD, and application programming interfaces (APIs), enabling KRA to achieve end-to-end visibility of transactions.
The integration with payment systems will allow automatic generation of Payment Registration Numbers (PRNs) and enable immediate tax settlement once a transaction is completed. This is expected to eliminate delays between invoicing and payment—gaps that have historically enabled under-reporting.
“The impact is twofold: improved cash flow for the government and reduced administrative burden for businesses,” Obell said, noting that firms will no longer need to manually reconcile invoices and payments.
A key feature of the reforms is the pre-population of tax returns. Sales data captured through eTIMS will feed directly into taxpayer accounts, meaning businesses will find much of their filings already completed, reducing errors and simplifying compliance—particularly for small and medium enterprises.
KRA is also embedding advanced analytics, including artificial intelligence-driven risk profiling and a “Taxpayer 360” view, to detect inconsistencies in real time and shift enforcement from reactive audits to predictive compliance.
Complementing eTIMS is a major overhaul of iTax into a modular, API-driven system supported by platforms such as EAPI and GavaConnect, enabling seamless integration with payment providers, government databases, and third-party systems.
The authority says the upgraded infrastructure—built on cloud-enabled or hybrid systems—will deliver up to 99.8 P.c uptime, addressing longstanding concerns over system downtime during peak filing periods.
Beyond compliance, the reforms are part of a broader strategy to expand the tax base. Since establishing the Micro and Small Taxpayers unit in 2024, KRA has onboarded at least 511,000 new taxpayers and is targeting an additional 320,000, supported by nationwide outreach and partnerships with counties and business associations.
The agency is also training 3,500 agents to support taxpayers across the country, as it seeks to formalise more businesses and improve voluntary compliance.
The digital push aligns with government plans to raise domestic revenue, including increasing value-added tax (VAT) contribution to gross domestic product from 4 P.c to 6 P.c. Currently, only about 250,000 businesses are VAT-registered, a figure KRA considers too low.
To address this, policymakers are considering reforms that could require all businesses—regardless of turnover—to remit VAT, a significant shift from the current Sh5 million annual threshold.
