Introduction: A Digital Shift That Could Be Costing You

3 min read

Ruth Mwiti

June 25, 2025

When the Kenya Revenue Authority (KRA) introduced auto-populated VAT returns through the eTIMS system, the goal was to simplify tax compliance and reduce fraud. But for many businesses, this well-meaning shift may be creating serious new risks — especially around unclaimed input VAT and incorrect sales reporting.

At TAC Professional Services, we’ve observed emerging patterns that reveal just how vulnerable compliant taxpayers have become under this new system.

Case Study: One Period, Two Different Reports

Consider this real-life example from one of our clients:

On May 8, 2025, we downloaded their VAT purchase report from eTIMS. It showed Ksh 2 million in input VAT.
Just 12 days later, on May 20, we downloaded the report again — this time it reflected Ksh 3 million.

Same taxpayer. Same return period. Completely different data.

The implications? If the taxpayer had filed based on the earlier report, they would have lost Ksh 1 million in valid VAT inputs — with no way to adjust after filing, since auto-populated returns are locked. And this isn’t an isolated incident. We’ve seen multiple discrepancies tied to timing of report downloads, all with real financial consequences.

The Problem Isn’t Just on the Purchase Side

The issues with auto-populated VAT returns extend beyond input VAT.

Here’s what else we’re seeing:

1. Sales data errors

Some businesses are being assigned sales that don’t belong to them, inflating their VAT payable.

2. Buyer PIN mismatches

In many cases, the correct buyer PIN is entered at the time of invoice generation, but doesn’t reflect in eTIMS. This prevents the buyer from claiming the input VAT, despite having done everything right.

3. No resolution mechanisms

KRA has no formal system to correct these anomalies within the platform — leaving taxpayers stuck with inaccurate data and increased audit exposure.

4. Real-World Consequences for Taxpayers

The cumulative impact of these system limitations includes:

Loss of legitimate input VAT
Overstated VAT liability
Breakdowns in supplier-buyer reconciliation
Higher risk of KRA audits
Cash flow pressure, especially for SMEs

How to Protect Your Business from VAT Discrepancies

If your VAT returns are now auto-populated, here’s how to stay ahead of potential errors:

a. Pull Reports Twice

Download your eTIMS sales and purchase reports at least twice — once around the 10th and again just before filing on the 20th.

b. Keep Internal Records

Maintain an independent sales and purchases log to compare with eTIMS data.

c. Confirm Buyer PINs

Ask your suppliers to confirm accurate buyer PINs and double-check invoice transmission status.

d. Reconcile Transactions Early

Proactively match data with customers and suppliers before the filing deadline.

e. Raise Support Tickets

Log anomalies via iTax support or escalate to your KRA Relationship Officer.

f. Keep All Original Documents

Preserve invoices, delivery notes, and email trails for any transactions that could be disputed later.

Conclusion: Automation Is Not Always Accurate

Tax digitization is essential, but when system errors go unaddressed, compliant businesses pay the price. The auto-populated VAT returns are a step forward in theory — but in practice, they’re causing losses, mismatches, and compliance risks for many.

Until KRA strengthens eTIMS and offers resolution paths, the burden remains on taxpayers to double-check and flag errors proactively.