Mugure Ng'ethe & Associates

Directions

Mugure Ng'ethe & Associates A Cloud Based firm taking SME's to the next level through Accounting,Controls and Advisory Services.

24/09/2026

The glorious days when a small business could assume, mimi ni mkulima mndogo KRA won't bother with me, are gone.

KRA no longer needs you to be a big business before it starts looking at your tax affairs.

You can be doing 3 millions in annual sales and still receive a tax audit notice.

Keep proper books documenting everything.

KRA has responded to taxpayers concern over iTax portal downtime
16/09/2026

KRA has responded to taxpayers concern over iTax portal downtime

KRA has clarified that it is not backing down on the new documentation requirements for goods coming into Kenya.
07/09/2026

KRA has clarified that it is not backing down on the new documentation requirements for goods coming into Kenya.

04/09/2026

Starting Tuesday this week,

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

There is one critical provision of the Act that was delayed to September to give importers time to adjust. It 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 extra thing.

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 do not have the documentation?

KRA has been given the 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.

27/08/2026

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.

22/08/2026

eTIMS Tip.

Having a valid eTIMS invoice does not automatically make an expense tax deductible.

The purchase must make sense for your business.

For example, if you sell car spare parts, an eTIMS purchase invoice for KSh 1 million worth of alcohol will raise KRA's eyebrows if you try to deduct it as a business purchase.

There is no nexus between alcohol and your business.

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 Anto.

Anto 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 Ruai and Kamulu.🤣

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

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

Anto 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 Anto 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.

Anto 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.

13/08/2026

KRA has completed the fumigation of the bugs that had blocked communication between iTax and eTIMS.

All July eTIMS invoices are now reflected in the VAT CSVs.

You can now file your correct July VAT return.

If you filed earlier with omitted invoices, amend the return.

04/08/2026

NEW DEVELOPMENT FROM YESTERDAY'S POST

KRA's brand new ACD import system has been taken to court.

There is a Kenyan tech company called Greenworld Big Data Limited.

In 2023, KRA invited the company to Times Tower for a presentation.

Greenworld's director, Mr. Munene, says the company had developed a digital cargo declaration system called ACID.

The idea was, before cargo leaves China or any other country, the exporter declares it electronically. KRA then knows exactly what is coming into Kenya before the ship even sails.

Greenworld presented the system to KRA, hoping KRA would buy it.

During the presentation, Munene says, all the top KRA officials were nodding their heads and appeared wowed by the system.

Greenworld left thinking: Baas, hii software tunauzia KRA.

Fast forward to 3rd August 2026.

KRA officially launched the Advance Cargo Declaration (ACD) system without Greenworld.

Greenworld has now sued KRA and John Mbadi, claiming that,

- KRA copied its idea without paying for it.
- And that KRA only edited "I" from ACID.

Greenworld wants the court to order one of two things:

• KRA should stop using the ACD system. Or
• If KRA continues using it, KRA should pay Greenworld a 30% royalty on the value, savings, and efficiencies generated by the system.

The court will now answer one question.

- Did KRA independently develop the ACD system, or did it unlawfully copy Greenworld's technology?

Address

Limuru Road
Nairobi
19263-0100

Opening Hours

Monday 08:00 - 17:00
Tuesday 08:00 - 17:00
Wednesday 08:00 - 17:00
Thursday 08:00 - 17:00
Friday 08:00 - 17:00
Saturday 08:00 - 14:00

Website

Alerts

Be the first to know and let us send you an email when Mugure Ng'ethe & Associates posts news and promotions. Your email address will not be used for any other purpose, and you can unsubscribe at any time.

Shortcuts

Share

Category