The Kenya Revenue Authority has significantly intensified its enforcement of the electronic Tax Invoice Management System (eTIMS) for landlords earning rental income. As of early 2026, KRA has issued over 140,000 compliance notices to taxpayers who have not yet registered on the platform, with penalties for non-compliance reaching up to KSh 1,000,000 or 200% of the tax due. For Kenyan landlords — whether you own a single rental unit in Rongai or manage a portfolio of apartments across Nairobi — understanding KRA eTIMS compliance is no longer optional. It is a legal requirement that directly affects your bottom line.
This guide explains what eTIMS is, who must comply, how to register, what records you need to maintain, and how property management software can automate the entire compliance process so you never face a penalty.
Table of Contents
What Is KRA eTIMS?
eTIMS — the electronic Tax Invoice Management System — is KRA's digital platform for issuing, transmitting, and validating tax invoices in real time. Launched as part of Kenya's broader tax modernisation effort, the system requires businesses and individuals earning taxable income to generate electronic invoices that are transmitted directly to KRA's servers at the point of sale or service delivery.
In plain language, eTIMS replaces the old paper-based invoicing system. Instead of handwriting a receipt book or printing invoices from a Word document, every invoice you issue must now be generated through an eTIMS-compliant system that sends a copy to KRA simultaneously. Each invoice receives a unique identification number and a QR code that KRA can verify.
The system was introduced under the Tax Procedures Act (2015) and gained enforcement teeth through the Finance Act amendments of 2023 and 2024. KRA's stated goal is to close the tax gap — the difference between what should be collected and what actually is. According to KRA's own data, Kenya's tax-to-GDP ratio sits at approximately 15.4%, well below the sub-Saharan African average of 16.5% and significantly behind the 20% target set by the National Treasury. Rental income, which KRA estimates accounts for over KSh 120 billion annually across the country, has historically been one of the most under-reported income categories.
For landlords, the practical implication is straightforward: every time you receive rent from a tenant, you are expected to issue an eTIMS-compliant invoice. KRA uses the data from these invoices to cross-reference your rental income tax returns, making it far more difficult to under-report income.
Do Landlords Need to Comply with eTIMS?
The short answer is yes — virtually all landlords earning rental income in Kenya must now comply with eTIMS. The January 2026 expansion of the eTIMS mandate removed the previous distinction between VAT-registered and non-VAT taxpayers, bringing all income earners — including landlords receiving residential and commercial rent — under the eTIMS umbrella.
Here is who must comply:
- All VAT-registered landlords. If you are registered for VAT (typically because you earn rental income from commercial properties exceeding the VAT threshold of KSh 5,000,000 per annum), you have been required to use eTIMS since 2023.
- Non-VAT landlords earning above the tax threshold. If your total annual rental income exceeds KSh 288,000 (KSh 24,000 per month), you must register for eTIMS. This covers the vast majority of landlords, since even a single bedsitter in most Kenyan towns generates more than this amount.
- Landlords using the simplified tax regime. Those who opted for the Monthly Rental Income (MRI) tax — a simplified 7.5% tax on gross rent between KSh 288,000 and KSh 15,000,000 per year — are also required to register and issue eTIMS-compliant invoices.
According to KRA statistics released in February 2026, approximately 380,000 landlords are registered for rental income tax in Kenya, but only about 145,000 had registered on eTIMS by the end of 2025. That means roughly 62% of known landlords were not yet compliant when the expanded mandate took effect. KRA has publicly stated that enforcement actions, including penalty assessments and account freezes on iTax, are being escalated through 2026.
The only landlords currently exempt are those earning below the minimum taxable threshold. If your total rental income is under KSh 288,000 per year, you do not need to register. However, if you cross that threshold at any point during the year, you are expected to register within 24 hours under the current regulations.
eTIMS Registration — Step by Step
Registering for eTIMS is a process that most landlords can complete in under an hour, provided you have the necessary documents ready. Here is a step-by-step walkthrough.
Step 1: Ensure Your KRA PIN Is Active
You need a valid KRA PIN to register for eTIMS. If you already file rental income tax returns, your PIN is active. If you have never filed, or if your PIN has been deactivated due to dormancy, you will need to reactivate it first through the iTax portal or by visiting a KRA office. Approximately 27% of PIN holders in Kenya have dormant accounts, according to KRA data, so this step trips up more landlords than you might expect.
Step 2: Log In to the iTax Portal
Go to itax.kra.go.ke and log in using your KRA PIN and password. If you have forgotten your password, use the password reset function — you will need access to the email address or phone number linked to your PIN.
Step 3: Navigate to the eTIMS Section
Once logged in, navigate to the eTIMS menu. Select "eTIMS Registration" and choose your taxpayer category. For most individual landlords, this will be "Individual" or "Non-VAT Taxpayer." For landlords operating through a company or partnership, select the appropriate entity type.
Step 4: Choose Your eTIMS Solution
KRA offers three ways to use eTIMS:
- eTIMS Online (Web Portal). The simplest option — you log in to the eTIMS portal through your browser and create invoices manually. Best for landlords with very few tenants (1–3 units) who do not mind manual entry.
- eTIMS Desktop (Downloadable App). A desktop application that you install on your computer. Offers slightly more functionality than the web portal but still requires manual invoice creation.
- eTIMS API Integration. For landlords using property management software or accounting systems, the API allows automated invoice generation and transmission. This is the most efficient option for landlords with multiple units, as invoices are created and sent to KRA automatically when rent is charged or received.
Step 5: Complete Registration and Activate
Fill in the required details — your business description (rental income), location of your properties, and contact information. Submit the registration and wait for activation. Most activations are processed within 24–48 hours, though some landlords report same-day activation. You will receive a confirmation SMS and email once your eTIMS account is active.
Step 6: Configure Your Invoice Details
Once activated, set up your invoice template with your name or business name, KRA PIN, property details, and payment terms. For rental income, each invoice should specify the tenant name, unit or property reference, rental period, amount due, and payment method.
What Documents Do Landlords Need?
Maintaining proper documentation is at the heart of eTIMS compliance. KRA can audit your records going back five years under the Income Tax Act (Cap 470), so organised record-keeping is not just good practice — it is a legal safeguard. Here is what you need to keep:
- Electronic invoices. An eTIMS-compliant invoice for every rent charge issued to tenants. Each invoice must include a unique invoice number, your KRA PIN, the tenant's name, the rental amount, and the period covered.
- Payment receipts. Digital receipts confirming payment received for each invoice. If a tenant pays via M-Pesa, the receipt should reference the M-Pesa transaction code alongside your eTIMS invoice number.
- Lease agreements. Signed lease agreements for every tenancy, specifying the monthly rent, lease duration, deposit amount, and terms. KRA may request these to verify that invoiced amounts match agreed rental terms.
- Rental income records. Monthly and annual summaries of all rental income received, broken down by property and unit. These records should reconcile with your eTIMS invoices and your bank or M-Pesa statements.
- Expense records. Receipts and invoices for property-related expenses you intend to claim as deductions — maintenance, property management fees, insurance, mortgage interest, and agent commissions. Under the current rules, expenses without eTIMS-compliant documentation may be disallowed by KRA.
- Bank and M-Pesa statements. Monthly statements showing all rental income deposits. These serve as a reconciliation check against your invoices and receipts.
A 2025 survey by the Kenya Property Developers Association found that 71% of landlords managing fewer than 10 units kept their financial records in spreadsheets or paper notebooks, with no standardised filing system. This informal approach creates serious exposure during a KRA audit. The difference between a clean audit and a penalty assessment often comes down to whether your records are organised, complete, and digitally accessible.
Penalties for Non-Compliance
KRA has established a clear and punitive penalty structure for eTIMS non-compliance. Understanding these penalties is important because they are not theoretical — KRA issued over 23,000 penalty assessments related to eTIMS non-compliance in the 2024/25 financial year alone, according to data presented to Parliament by the KRA Commissioner General.
Failure to Register for eTIMS
Under Section 75 of the Tax Procedures Act, failure to register for eTIMS when required carries a penalty of KSh 100,000 or six months imprisonment, or both. In practice, KRA typically starts with the financial penalty and escalates to prosecution for repeat offenders or cases involving significant tax evasion.
Failure to Issue Electronic Invoices
If you are registered on eTIMS but fail to issue electronic invoices for your rental income, the penalty is 200% of the tax due on the unreported income, or KSh 1,000,000, whichever is higher. For a landlord earning KSh 100,000 per month in rent and paying the 7.5% MRI tax, the tax due per month is KSh 7,500. A year of non-compliance would mean KSh 90,000 in tax due, with a penalty of KSh 180,000 (200%) — but since the minimum is KSh 1,000,000, the landlord would face a KSh 1,000,000 penalty. This makes the minimum penalty disproportionately severe for smaller landlords.
Disallowance of Expense Deductions
Perhaps the most financially impactful penalty for landlords using the standard rental income tax regime (rather than MRI) is the disallowance of expense deductions. Under the current rules, any expense that is not supported by an eTIMS-compliant invoice from the supplier cannot be claimed as a tax deduction. If you spend KSh 500,000 on property renovations but the contractor did not issue an eTIMS invoice, that entire amount is disallowed — increasing your taxable income by KSh 500,000.
Late Filing Penalties
Separate from eTIMS-specific penalties, landlords who file their rental income tax returns late face a penalty of 5% of the tax due or KSh 20,000, whichever is higher, plus 1% compounding interest per month on the outstanding amount. These penalties accumulate quickly. A landlord with KSh 200,000 in annual tax liability who files six months late would owe approximately KSh 22,000 in penalties and interest on top of the original tax.
How Property Management Software Automates Compliance
For landlords managing more than a few units, manual eTIMS compliance — logging into the portal, creating individual invoices for each tenant, matching payments to invoices, and maintaining organised records — becomes unsustainable. This is particularly important for diaspora landlords who need to maintain compliance remotely. A landlord with 20 units would need to create 20 invoices every month, issue 20 receipts, and maintain reconciled records across all of them. That is roughly 480 compliance documents per year, not counting expense records.
Property management software eliminates this burden by automating the key compliance tasks:
Automated Invoice Generation
When you set up your properties and tenants in a PMS like Pangoni, the system automatically generates a digital invoice for each unit at the start of every billing cycle. Each invoice contains the correct landlord details, tenant information, rental amount, period, and reference numbers — formatted to meet eTIMS documentation standards.
Automatic Receipt Issuance
When a tenant pays rent — whether via M-Pesa, bank transfer, or cash — the PMS automatically generates a digital receipt linked to the corresponding invoice. For M-Pesa payments, the reconciliation happens in real time: the payment comes in, gets matched to the tenant and invoice, and a receipt is issued within seconds. The tenant receives the receipt via SMS, and you have a complete audit trail without lifting a finger.
Organised Financial Records
Every transaction — invoices, payments, receipts, arrears, deposits — is recorded in the PMS database with timestamps, reference numbers, and linkages. When KRA requests your rental income records, you can generate a comprehensive report covering any date range in under a minute. No more digging through M-Pesa statements or searching for receipt books.
Export-Ready Tax Reports
At tax filing time, your PMS produces income summaries, expense reports, and tenant payment histories in formats that align with KRA requirements. You or your accountant can download these as PDF or CSV files and use them directly for filing. According to property managers we have spoken with, using a PMS reduces tax filing preparation time from an average of 3–5 days to roughly 2–3 hours.
Compliance Alerts and Reminders
A good PMS will notify you of upcoming tax deadlines, flag invoices that have not been matched to payments, and alert you to any gaps in your documentation. This proactive approach means you catch compliance issues before KRA does, rather than discovering them during an audit.
Practical Tips for Staying Compliant
Beyond using the right tools, here are practical habits that will keep you on the right side of KRA's eTIMS requirements.
Establish a Monthly Compliance Routine
Set aside time on the first and last day of each month for compliance tasks. On the first, verify that invoices have been generated for all tenants. On the last, reconcile all payments received against invoices issued and ensure receipts have been generated for every payment. If you use property management software, most of this is automated — your monthly routine becomes a 15-minute review rather than a half-day exercise.
Keep Digital Copies of Everything
Do not rely on paper records alone. Scan or photograph all lease agreements, contractor receipts, and expense invoices, and store them digitally — either in your PMS or in a cloud storage service like Google Drive. KRA audits can go back five years, and paper records have a way of getting lost, damaged, or disorganised over time. Digital records with proper naming conventions (e.g., "2026-03_Unit-4B_Rent-Receipt.pdf") are far easier to retrieve.
Separate Personal and Rental Finances
Use a dedicated M-Pesa Paybill or bank account for rental income. Mixing rental income with personal transactions makes reconciliation difficult and creates problems during audits. According to tax practitioners in Nairobi, commingled accounts are one of the top three triggers for extended KRA audits of landlords.
Work with a Tax-Aware Accountant
While property management software handles documentation, a qualified accountant ensures you are using the right tax regime (MRI vs. standard), claiming all allowable deductions, and filing correctly. The cost of a competent accountant — typically KSh 15,000–50,000 per year for a small-to-mid-size portfolio — is a fraction of what a single penalty assessment would cost. Make sure your accountant is familiar with eTIMS requirements specifically, as the system is still relatively new and not all practitioners are up to speed.
File and Pay on Time, Every Time
For landlords on the MRI regime, rental income tax is due by the 20th of the month following the month in which rent was received. For those on the standard regime, returns are filed annually by 30 June. Late payment penalties start accruing immediately — there is no grace period. Set up calendar reminders or use your PMS's built-in deadline alerts to ensure you never miss a date. KRA data shows that approximately 34% of rental income tax filings are submitted late, resulting in avoidable penalties totalling an estimated KSh 2.8 billion annually.
Frequently Asked Questions
As of January 2026, all landlords earning rental income above the KRA tax threshold of KSh 288,000 per year (KSh 24,000 per month) are required to register for eTIMS. This applies regardless of whether you are VAT-registered or not. The January 2026 expansion removed the previous exemption for non-VAT taxpayers, meaning virtually all landlords earning meaningful rental income must now comply. The only exception is landlords whose total annual rental income falls below the threshold.
Penalties are severe. Failure to register carries a fine of KSh 100,000 or up to six months imprisonment. Failure to issue electronic invoices results in a penalty of 200% of the tax due or KSh 1,000,000, whichever is higher. Additionally, expenses not backed by eTIMS-compliant invoices are disallowed as deductions, which increases your taxable income. Late filing of rental income tax returns incurs a further penalty of 5% of the tax due or KSh 20,000, plus 1% compounding interest per month.
Yes. Property management software like Pangoni automates the generation of digital invoices and receipts for every rent transaction, maintains organised records of all income and expenses, and produces export-ready reports for tax filing. While a PMS does not replace the need to register on the eTIMS portal itself, it ensures all your financial documentation is complete, accurate, and audit-ready — significantly reducing compliance effort and penalty risk.
Log in to the iTax portal at itax.kra.go.ke using your KRA PIN. Navigate to the eTIMS section, select your taxpayer category, and choose your preferred solution — the online portal, desktop application, or API integration through a certified system. Complete the registration form with your business details and property information, then submit for activation. Most accounts are activated within 24–48 hours. You will need a valid KRA PIN, a registered email address, and access to your iTax account to complete the process.
Yes, eTIMS applies to all rental income — both residential and commercial. KRA treats rental income as taxable income regardless of the property type. Landlords must issue eTIMS-compliant invoices for monthly rent, service charges, and any other payments received from tenants under a lease agreement. The requirement applies equally to a bedsitter in Githurai and a penthouse in Westlands — if the income crosses the tax threshold, electronic invoicing is mandatory.
Do not wait for a KRA penalty notice to take action. Getting compliant with eTIMS now protects your rental income and gives you peace of mind during tax season. Pangoni automates the invoicing, receipting, and record-keeping that eTIMS demands — so you can focus on managing your properties, not chasing paperwork.
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Have questions about eTIMS compliance? Get in touch with our team, or explore our complete guide to property management software in Kenya.