ERP Software for Kenyan Businesses

Effective January 1, 2026, KRA began validating income and expenses declared in income tax returns against eTIMS data, withholding tax records, and customs import records. Section 16(1)(c) of the Income Tax Act requires that all expenditure or losses deducted to arrive at taxable income must be supported by eTIMS-generated invoices. If an expense is not recorded in eTIMS with the buyer's PIN, the deduction may be disallowed. Limited exemptions exist for emoluments, imports, interest payments, and transactions subject to withholding tax as a final tax.

For the 2025 tax year (filed by June 30, 2026), KRA provided a one-time concession allowing taxpayers to declare income and claim expenses in a "non-eTIMS" section of the iTax return. This concession is not expected to continue for future tax years. Yukti integrates with the eTIMS system to transmit every invoice with the correct buyer PIN, ensuring all transactions create valid eTIMS records that will pass KRA validation.

Kenyan VAT applies at 16% on most taxable supplies, with zero-rating for exports and certain essential goods. VAT returns must be filed monthly by the 20th of the following month through the iTax portal. Withholding VAT at 2% applies to government entities and appointed agents purchasing from VAT-registered suppliers. Yukti handles VAT calculation, withholding VAT deductions, and generates iTax-compatible return data.

Corporate Income Tax applies at 30% for resident companies and 37.5% for non-resident companies. The turnover tax at 3% applies to businesses with annual income between KES 1 million and KES 25 million as a simplified alternative. Monthly Pay-As-You-Earn (PAYE) must be remitted by the 9th of the following month. Yukti calculates PAYE using the graduated tax bands, applies personal relief, and generates the P10 monthly return and P9A annual certificate.

Payroll compliance also includes NSSF (National Social Security Fund) contributions at 12% of pensionable earnings (split equally between employer and employee, capped at KES 4,320 per month each), NHIF (National Hospital Insurance Fund) contributions on a graduated scale, and Housing Levy at 1.5% of gross pay (matched by employer). Yukti calculates all statutory deductions and generates the payment files for each fund.

Kenya's digital economy is growing rapidly, and KRA has extended tax obligations to digital marketplace operators and cross-border digital service providers through the Digital Services Tax and Digital Marketplace provisions.