NAIROBI, Kenya, Feb 26 – Structural gaps in Kenya’s digital VAT compliance system, including downtime, invoice mismatches, supplier reluctance and costly reconciliation, are emerging as key fault lines in the country’s tax overhaul, according to Thuku wa Thuku, Chief Operations Officer at DigiTax.
Speaking at a high-level VAT seminar hosted by the Kenya Association of Manufacturers (KAM) in partnership with DigiTax, Thuku said that while the electronic Tax Invoice Management System (eTIMS) was designed to simplify compliance, operational weaknesses are leaving manufacturers exposed.
“One of the top concerns from manufacturers is system downtime. When you’re trying to generate an invoice and the system is down — whether it’s network, power, or platform failure — that becomes a tax compliance issue,” he said.
He noted that some manufacturers have hired up to 100 staff solely to reconcile mismatched invoices between their internal systems and those of the Kenya Revenue Authority (KRA).
Incomplete invoice transmission and duplication errors further compound the problem.
For large manufacturers processing tens of thousands of invoices daily, even a small failure rate can create costly reconciliation burdens. Some firms have resorted to estimating VAT obligations — a risky move as VAT auto-population tightens and links deductible expenses directly to system-validated invoices.
The challenge is worsened by Kenya’s largely informal supply chains.
Small-scale suppliers, particularly in agriculture and fragmented sectors, often lack awareness or technical capacity to issue compliant eTIMS invoices, leaving manufacturers at risk of losing input VAT claims.
“One thing to notice is that Kenya is largely an informal marketplace. The reluctance I’ve seen is due to lack of awareness and, in some cases, not knowing how to use the technology tools to generate compliant invoices,” Thuku said.
He also cited integration bottlenecks between enterprise resource planning (ERP) systems and tax transmission platforms, as well as limited post-sale support from some solution providers.
These gaps, he warned, delay invoice validation, disrupt cash flow and increase audit exposure, stressing that the strain reflects infrastructure and operational weaknesses rather than resistance to policy.
