KRA's eTIMS stock records rule: what distributors must do now

In early September 2026, the Kenya Revenue Authority published a public notice titled Implementation of the Stock Management Functionality for Electronic Invoicing. It tells every business using TIMS or eTIMS to keep accurate, up-to-date stock records in those systems.

If you distribute, wholesale or manufacture goods, this is the eTIMS change that reaches your warehouse, not just your invoices. Here is what the notice says, where the rule comes from, and what to fix first.

What the notice says

KRA asks taxpayers to account for goods as they move through the business: stock that is purchased or received, sold, transferred, returned, adjusted or otherwise disposed of.

KRA also said it would hold consultative forums with businesses, starting in September 2026, to explain how the stock functionality works and to collect implementation problems.

The notice does not set an enforcement date, and at the time of writing we have not seen one published. Treat that as preparation time, not a reprieve.

The rule is not new. The checking is.

The obligation already sits in law. Section 23A of the Tax Procedures Act requires every person carrying on business to issue electronic tax invoices through KRA’s system and to maintain a record of stocks in that system.

Regulation 4(3)(c) of the Tax Procedures (Electronic Tax Invoice) Regulations, 2024 (Legal Notice 64 of 2024) spells out the detail: maintain stock-in and stock-out records in the system, record each local purchase and import, and notify the Commissioner in writing of current stock within thirty days before a business closes.

What changes now is that KRA is switching on the functionality to see those records. Once purchases in, sales out and stock on hand all sit in KRA’s systems, the gaps between them become visible.

That matters because of a second change that is already live. From 1 January 2026, KRA validates the income and expenses declared in income tax returns against TIMS/eTIMS invoices, withholding tax data and customs import records, starting with returns for the 2025 year of income. Declared expenses must be backed by a valid electronic tax invoice carrying the buyer’s PIN where applicable, subject to the exceptions in section 23A of the Tax Procedures Act.

Put the two together and KRA can compare what you bought, what you sold and what you say you still hold.

Who it covers

The Regulations apply to anyone carrying on business unless they are exempted under section 23A of the Act. Regulation 4(4) says the Commissioner may require these persons to use a system that does not keep a record of stocks:

• persons providing services;
• persons who are not registered for VAT and have annual turnover below KES 25 million, using a simplified system the Commissioner prescribes; and
• any other person using a system the Commissioner prescribes.

If you are VAT-registered and you sell goods, plan on the stock rule applying to you. That covers most distributors, wholesalers, manufacturers and multi-branch retailers.

What happens if you ignore it

KRA’s notice sets no new penalty or deadline. The Tax Procedures Act already sets the penalties, and how long you must keep records:

• Section 86 of the Tax Procedures Act, which Regulation 12 points to. KRA first asks you in writing for your reasons. If it is not satisfied, the penalty is the higher of 5% of the tax due or KES 100,000 for a company (KES 10,000 for an individual).
• Section 82, for failing to keep the documents a tax law requires: the higher of 10% of the tax payable for the reporting period or KES 100,000.
• Section 23, which requires you to keep those documents for five years from the end of the reporting period they relate to.

The bigger day-to-day risk is quieter: disallowed expenses, assessments based on KRA’s view of your stock, and weeks of reconciliation under pressure.

What “stock in eTIMS” means in practice

The detail depends on how you connect. KRA offers several eTIMS solutions, including the online portal, the eTIMS Client and system-to-system integration for businesses that already run an invoicing or ERP system. If your stock lives in an ERP, your eTIMS stock records can only be as good as the data in it.

Odoo’s documentation for its Kenyan eTIMS integration gives a useful picture of what a connected system has to do:

• Products are registered with KRA before they can move, using the item codes KRA provides.
• Stock movements are sent to KRA, including internal transfers and adjustments, not just sales.
• Supplier invoices are fetched from eTIMS and must be matched to confirmed purchase order lines, with billed quantities equal to the quantities received.
• Customs imports are matched to the purchase order that received them, so stock is adjusted correctly.
• Manufacturers send bills of materials, so KRA can follow raw materials into finished goods.
• Credit notes reference the original invoice and cannot exceed its quantities or prices.

Whatever system you run, the same disciplines apply.

Checklist for distributors

Work through this list branch by branch. Start with items 2 and 3, because everything after them depends on a clean product list and a true opening count.

1. Confirm how each branch connects to eTIMS. Note the solution in use for each branch and each till. Mixed setups cause gaps.
2. Clean the product master. One record per item, one consistent unit of measure (carton, piece, kilo), and a KRA item code on every product you buy or sell.
3. Count and post opening stock. Do a physical count per warehouse and post the differences as documented adjustments, with reasons.
4. Match purchases to receipts. Ask every supplier for eTIMS invoices carrying your PIN. Quantities billed should equal quantities received. Chase the ones that do not.
5. Link imports to customs entries. Each import should arrive in stock against its customs record, not as a manual adjustment.
6. Record branch transfers as transfers. Moving stock between your own branches is not a sale and should not look like one.
7. Handle returns with credit notes. Each credit note should point to its original invoice.
8. Document every write-off. Damages, expiries, samples and theft go in as adjustments with a reason and an approver.
9. Reconcile monthly. Compare eTIMS purchase and sales data with your books, and system stock with a cycle count. KRA suggests asking your account manager for TIMS/eTIMS schedules to check declared figures.
10. Have a downtime procedure. If you cannot use the system, Regulation 5 requires you to notify the Commissioner in writing within 24 hours, record sales by other means the Commissioner specifies, and enter them once the system is back.
11. Keep records for five years from the end of the reporting period, in a form you can produce on request.
12. Stay in the conversation. Attend a KRA forum or raise questions through the contact details on the notice. Implementation details may still change.

This is general information, not legal or tax advice. Confirm your position with KRA or your tax adviser.

Getting your stock ready

The usual causes of stock gaps are mundane: duplicate items, unit mix-ups, transfers posted as sales, purchases never matched to receipts. Fixing them takes careful setup and a few weeks of disciplined habits, and the same work sharpens your margins and reorder planning.

If your stock runs on Odoo, or you are moving to it, our KRA eTIMS compliance service covers a readiness review, eTIMS setup for each branch, stock-record setup and staff training.