A leading tax expert in Kenya is urging a separation of expense deductibility from eTIMS compliance, warning that the current mandate in the Finance Act 2023 could significantly harm businesses, particularly MSMEs, by disallowing legitimate expenses if not supported by an electronic tax invoice by January 1, 2026.

• Edna Gitachu, a tax analyst, proposes adopting a "Rwanda Model" to allow alternative proof for legitimate expenses.
• The Kenya Revenue Authority (KRA) is standing firm, citing risks of fictitious invoices and recent improvements like eTIMS Lite.
• Gitachu also highlighted an "accounting mismatch" where the KRA's eTIMS system captures invoice generation as immediate income, ignoring standard accounting practices for deferred revenue.