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The Kenya Revenue Authority (KRA) is in early talks with Safaricom to let M-Pesa generate eTIMS tax invoices on behalf of small traders who are paid through tills and Paybills. A KRA official told the National Assembly Finance and National Planning Committee on Tuesday that Safaricom wants to carry out “reverse invoicing” for merchants, Business Daily reports.
How M-Pesa eTIMS invoicing would work
Under the proposal, Safaricom would create an electronic tax invoice for M-Pesa payments received by small traders and send it to KRA at the end of each day. KRA says the approach has already worked with supermarkets, which generate invoices on behalf of their small suppliers.
The law requires every supplier, whatever its size, to issue an eTIMS invoice as proof of a sale. Big buyers need those invoices to claim the purchase as a business expense, so many have dropped small suppliers who can’t produce them.
Why it matters to small traders
- Keep big customers: micro traders could supply larger firms without buying or learning invoicing systems.
- More visibility for KRA: the taxman would see more transactions from traders currently outside the tax net.
- Revenue push: KRA expects the measure to help close a revenue gap worth billions of shillings.
The talks are at a preliminary stage, and no start date has been announced. Until then, traders still need to issue eTIMS invoices themselves. Our guide to eTIMS vs ETR explains the options, and this tax comparison shows which taxes a small business pays.
FAQ
Can M-Pesa issue eTIMS invoices now?
Not yet. KRA and Safaricom are still in preliminary talks, so traders must keep issuing eTIMS invoices themselves.
What is reverse invoicing?
It is when the buyer, or a platform such as Safaricom, generates the tax invoice on behalf of the seller.
Who would benefit most?
Small and micro traders paid through M-Pesa tills and Paybills who supply goods or services to larger companies.
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