CPA Wachira Joseph

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CPA Wachira Joseph Tax advisor | Speaker and trainer on Tax & financial management.

10/09/2026

Last week I was in Nyandarua training milk farmers on eTIMS.

Their good customer, the dairy company that they sell milk to had organized the training for them.

When I was leaving, they gave me mutūngi mūgima wa iria ria kugagatia to carry back home.

Man listen, there is no milk in Kenya that can beat Nyandarua milk in terms of thickness. Not even girirando. Take that from me. I am the one telling you.

But after interacting with these farmers, this is my conclusion:

- If there is one group of people who genuinely need to understand eTIMS and its tax implications, it is our glorious farmers.

Why?

Many companies buying milk from farmers simply tell them. Kiwanuha tuletee eTIMS receipt ndio tukulipe pesa yako.

So the farmer runs to the cyber, gets the eTIMS receipt and complies.

But they do not understand what they are doing.
They have no clue what that eTIMS receipt means from a tax perspective.

At the end of the year, KRA can clearly see, through eTIMS, that you sold milk worth 1.2 million.

But because no one taught the farmer eTIMS implications, the farmer never collected eTIMS receipts from the agrovet when buying:

• Animal feeds
• Fertilizer.
• Seedlings.
• Farm chemicals.
• Animal drugs.
• Labour.
• Transport, etc

Their legit costs remain totally invisible. But their sales are fully visible to KRA.

Then trouble begins.

KRA sees the 1.2 million in sales. But sees almost zero deductible costs.
It is as if the milk fell from heaven.

So KRA retreats to Times Tower and treat the 1.2m as your farming profit.
Then demands about 30% income tax.
That is a whopping sh 300,000 tax.

But the farmer does not have that kind of money.

The money already went into animal feeds, workers, transport, veterinary costs, preparing the farm and keeping the cows producing milk.

The farmer is then left helpless before KRA.

This is why eTIMS education cannot stop at telling farmers how to issue receipts.

They need to understand the whole picture. That if your sales are being captured through eTIMS, you need to keep proper records and supporting eTIMS receipts for your legitimate expenses too.

If there is one group that deserves intensive training on eTIMS and its implications, it is our glorious farmers.

I'd also urge KRA to go to the village. To the farmers. To interact & educate them.

Explain practically what eTIMS means for them in Swahili or mother tongue.

It will make tax compliance easier and friendlier.

Please enlighten the farmers in your community.

They feed us all.

08/09/2026

There is a potential problem with the new income tax filing deadlines that the MPs did not spot.

Finance Act 2026 require that,

From 2027, individual taxpayers like you and me will have to file their income tax returns by 30 April, instead of 30 June.

- But what happens to people who earn income through partnerships?

A partnership is required to file its income tax return by 30 June 2027.

But the partners need the partnership’s filed figures to correctly determine their individual taxable income.

And their individual returns are due two months earlier, 30 April.

For example.

Sishabula and Wanjugu are partners in a business.

The partnership earns Sh 20M. After expenses, the partnership profit is Sh 8M.

That profit is allocated between the partners and ultimately forms part of their individual taxable income.

But the partnership return is not due until 30 June.

So how are Sishabula and Wanjugu expected to accurately file their individual returns by 30 April if the partnership has until 30 June to file?

Does the new law effectively mean partnerships must also file by 30 April because their partners need the figures for their individual returns?

Or will KRA provide another mechanism for partners to obtain the information they need before 30 April?

This needs clarification before 30 April 2027, so taxpayers have certainty.

Because you cannot tell a partner, 'file accurately by 30 April,' while the partnership supplying the numbers has until 30 June to file.

This is not a problem created by KRA. But by lawmakers. But KRA can help clarify how we are expected to deal with it.

04/09/2026

Starting Tuesday this week,

The second phase of implementation of the Finance Act 2026 kicked in.

The one and only provision of the Act that was delayed to September to give importers time to adjust is now in force.

It requires that if you import goods into Kenya, you now need to keep the foreign export documents for those goods.

This means an importer must keep an export declaration, export entry, or customs export certificate issued by the right authority in the country where the goods were bought.

And these documents must contain:

• Exporter and importer names and addresses
• Description of the goods
• Value
• Quantity
• Tariff classification
• Date of exportation
• Reference number from the foreign customs authority

Then there is one more thing to take seriously.

These documents must be kept for at least 5 years from the date of importation.

And if KRA asks for them, you must produce them.

But what happens if you don't have the documentation?

KRA has been given power to:

1. Reject your claims relating to the value of the goods, origin, cost or ownership of the goods.

2. Determine the customs value or tax liability itself using whatever information KRA has.

3. Impose penalties.

In other words, that little export document sitting somewhere in your supplier's country can become very important five years later.

As an importer, tighten your documentation to protect yourself.

Don't wait for KRA to ask for a document you should have kept from day one.

Good customs compliance starts long before the goods reach Kenya.

24/08/2026

There is one tax planning strategy I have seen many people overlook.

Many overlook GOOD BOOKKEEPING.

I see many taxpayers continue to lose tax cases with KRA at the tax appeal tribunal. Because of one fatal mistake: POOR RECORD KEEPING.

They lose not because they did not have legitimate business expenses, but because they could not prove that they actually happened through proper documentation.

The common documentation problems usually include:

• Misplaced documents
• Missing supporting documents
• Transactions recorded under the wrong categories
• Poor bank reconciliations
• Poor transaction narrations
• And many others

You can have the best tax strategy in the world. But if your books are a mess, KRA will turn that mess into a tax bill.

So as you plan your taxes, make bookkeeping part of the strategy.

Invest in an A+ bookkeeper. If you can, hire one full time. If you cannot, outsource.

A good bookkeeper costs money. But not more than the taxman.

21/08/2026

You can have a perfectly valid eTIMS invoice and still have KRA reject it.

Why?

Because KRA can ask: Show me the money trail.

This is extremely critical test that KRA applies.

Example.

You have an eTIMS invoice for KSh 1 million from your Supplier.

KRA can ask: Did you actually pay for these goods?

If you paid the supplier, show the bank or M-Pesa payment evidence.

If the supplier gave you credit, shiw the credit agreement or payment terms and record the KSh 1 million as a debt in your books.

If your good buddy paid the supplier directly for you, show:

• Proof that your buddy paid the supplier
• Your agreement with your buddy
• The repayment terms
• The amount recorded as a liability to your buddy

So, here's how you protect yourself.

For every business purchase, make sure these four things tell the same story.

eTIMS invoice → Proof of payment → Agreement/terms → Accounting records.

If you bought on credit, your books should show that you owe the supplier.

If someone paid on your behalf, your books should show that you owe that person.

If you paid directly, your bank or M-Pesa should show the payment.

Don't wait for a KRA audit to start assembling this evidence.

Build the evidence when you make the purchase.

That way, when KRA asks, “Prove this expense,” you don't start looking for documents. You simply open the file.

That's what good bookkeeping is.

20/08/2026

Another bookkeeping tip in this age of eTIMS.

Finance Act 2026 has prohibited KRA from accepting expense deductions that are not supported by eTIMS receipts. There are a few exceptions but that is the general rule now.

This means you have to be very intentional about collecting eTIMS invoices for your business purchases & spendings.

A strategic mistake that some people make is collecting poisoned eTIMS receipts.

Example.

Let's take a random guy & baptize him as Sishabula.

Sishabula buys and sells electronics. He knows that eTIMS invoices are now important for claiming business expenses. So he starts collecting eTIMS invoices from all his suppliers.

Then he gets clever. He gives his PIN to his buddies who are building houses in Kamulu.

They go to the hardware stores. They buy cement, stones, tiles and paint. And they give the hardwares Sishabula's PIN.

So on eTIMS, it looks like Sishabula bought everything. Let's say the purchases total Sh 1 million.

Sishabula now has 1 million worth of eTIMS purchases sitting under his PIN. He happily deducts the 1 million from his business income. Tax goes down. And when everyone asks him what his trick is he says, ni business acumen maze.

But there is one problem Sishabula forgot.

• A tax deduction is not allowed simply because an eTIMS invoice exists.

• The expense must have been wholly and exclusively incurred in producing his business income.

Sishabula sells electronics. Cement, stones, tiles and paint have nothing to do with his electronics business.

So those eTIMS invoices are actually poisoned receipts. They look like evidence. But during a KRA audit, they can become evidence against you.

Lesson.

- Do not just collect eTIMS invoices. Collect the right eTIMS invoices.

- Your eTIMS records must tell the same story as your actual business.

Tighten your bookkeeping.

19/08/2026

Finance Act 2026 has elevated KRA to be your tax preparer.

Come 2027, KRA will prepare a draft income tax return using the sales, expenses and other information available to it to determine your tax bill.

KRA will then send that return to you to either accept it or reject and amend it if you believe KRA's numbers are not born again.

If you choose to amend it, you must give KRA your born again figures and supporting records.

Now, the question everyone is asking is this.
-What happens when KRA rejects your actual born again numbers?

Well, this will definitely happen to some taxpayers in 2027.

If KRA rejects your figures, it shall confirm its original draft as the tax you are required to pay.

That becomes a tax assessment, which is a formal TAX DECISION.

If you disagree with KRA and can't take it lying down, that's where the tax war begins.

You then have 30 more days to file a formal objection or protest against the assessment.

Once KRA receives it, KRA has 60 more days to either agree with your objection or reject it once again.

If KRA agrees with your figures & records, you have won. Vacate Times Tower & go home.

If KRA rejects your objection and assert that it is your numbers that are actually not born again, you have another 30 days to decide whether to accept defeat or take the matter to the Tax Appeals Tribunal.

And if you lose there, you can appeal further to the superior courts, on legal grounds.

In 2027, your bookkeeping will determine whether you can defeat KRA's numbers. Tighten it.

18/08/2026

Finance Act 2026 has given KRA an enormous amount of power.

Starting January 2027, KRA won't wait for you to tell them your income for 2026.

The Act has empowered KRA to use any information available to it to tax a taxpayer. This includes:

• eTIMS sales data
• eTIMS purchase data
• Withholding tax records
• Customs records &
• Other third party information

So starting in January 2027, KRA shall tell you first what income it believes you earned in 2026, what expenses you incurred in 2026, and what tax you should therefore pay.

KRA shall then send you this as a draft return by 31 January 2027.

Once you receive it, you have 60 days, or 2 months (February and March), and only 2 options:

• Accept the draft return if you agree with it. Or,

• Reject it if you think KRA's numbers are insane, and provide your own sane figures for amendment together with supporting documents.

After KRA's approval, you will then use the accepted or amended figures to file your income tax return.

If you do not reject or amend the draft return, or you submit your amendments on day 61, KRA shall conclude that you have agreed with its initial tax estimates.

You will then have to pay the KRA generated tax bill.

• Lesson.

- Bookkeeping is King. Don't wait to become helpless in 2027. Keep your own records.

KRA's numbers are not always born again.

14/08/2026

Finance Act 2026 has made eTIMS even more central to businesses.

The law now prohibits KRA from allowing deduction of expenses that are not supported by eTIMS invoices. There are a few exceptions, but that is the general rule.

That means you could end up paying higher taxes simply because a legitimate business expense, such as a whole year's rent, is rejected by KRA because the landlord did not give you eTIMS invoices in 2026.

So here's a simple eTIMS bookkeeping hack to protect yourself.

• Make this 1 rule non negotiable: No eTIMS invoice. No payment. Period.

Every time you pay a business expense, save three things together:

• eTIMS invoice
• Proof of payment
• Supplier details

At the end of every month, reconcile your bank/M-Pesa payments against your eTIMS invoices.

If you paid someone but can't find the eTIMS invoice, chase them immediately.

Don't wait until the 2027 tax filing season to discover that half your expenses can be deducted.

06/08/2026

KRA is not playing with London Distillers.

You definitely know London distillers. They cook and sell alcohol.

In 2020 and 2021, they sold alcohol and charged customers excise tax on behalf of KRA.

Excise tax is a tax govt charges walevi to discourage excessive drinking.

London Distillers then filed its own excise tax returns and told KRA: We owe you Ksh 895 million.

Note, KRA did not assess this tax. It is London Distillers that admitted it owed KRA the money.

That statement is the heart of this tax fight. Read it again.

The company paid Ksh 378 million and left Ksh 517 million outstanding. KRA immediately started pursuing the balance.

Then someone at London distillers came up with another idea.

Instead of negotiating with KRA, let's talk directly to the CS for Treasury Ukur Yatani and ask him to forgive the 517m.

The directors said, perfect! Go for it. Do it! Fast!

They wrote to the CS. Told him they are unable to pay. The CS agreed.

In January 2022, Treasury directed KRA to cancel 80% of the outstanding tax, plus 100% of the penalties and interest. London to pay 20% only.

London Distillers happily returned to Athi River thinking the tax fight was over.

KRA, however, retreated to Times Tower and embarked on a fault finding mission. They wondered,

How will we meet our tax collection targets if the person setting those targets can forgive taxes anyhowly?

Then one afternoon, KRA finally finds the fault. There is one dangerous sentence sitting quitely in Kenyan tax law. It says,

• Only KRA can initiate tax cancellation after determining that recovery is impossible, unduly difficult or expensive, or would cause hardship or inequity to the taxpayer. KRA then forwards the recommendation to the CS for approval. The CS cannot start the process or issue the directive on his own.

KRA sought the Attorney General's opinion of this sentence.

The AG, Kihara, agreed that Treasury's directive was illegal. Because,

- London Distillers had already collected the excise duty from consumers.
- The money was never London's.
- They were merely holding it on behalf of KRA before remitting it.
- They must pay it to KRA.

The AG gave KRA the green light to continue pursuing their tax.

When Treasury saw the AG's opinion, it quickly withdrew the letter. KRA resumed the hunt for its Ksh 517 million undettered.

When London Distillers saw KRA was not playing, they ran to the High Court and later to the Court of Appeal.

London Distillers argued that:
- KRA had no right to ignore or reverse a directive that had come from the National Treasury.
- They accused KRA of usurping powers that properly belonged to the National Treasury & Cabinet Secretary.
- They had legit expectations that the govt could not forgive tax and later unforgive it.

This week, the Court of Appeal has ruled that,

- A Cabinet Secretary cannot wake up one morning and cancel taxes that the law does not allow him to cancel.

London Distillers has been ordered to pay the Ksh 517 million.

Case closed.

Lessons.

• Self declared taxes are admissions. Don't assume they can later disappear through letters to Treasury.

• Excise duty and VAT collected from customers are public money. You are only holding them for KRA.

• If you disagree with a tax, challenge it through the objection and appeal process. Don't build your cash flow around the hope that someone at Treasury will make it disappear.

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