ETIMS CHANGED HOW BUSINESSES OPERATE (BUSINESS MODEL) โ NOT JUST HOW THEY INVOICE
-When eTIMS regulations took effect, my clarion call to businesses focused on two non-negotiables:
1. Vet your suppliers for eTIMS compliance
2. Restructure your supply chain and business model to ensure tax compliance
-While a few businesses took this seriously, many remained stuck in the mindset of:
โItโs not possible to have all expenditure on eTIMS.โ
-This feedback continues to surface consistently in my Tax Clinics, SME trainings and advisory engagements.
-The reality, however, is uncomfortable but clear:
If your business model cannot support eTIMS-compliant expenditure, your expenses are at risk of being disallowed.
THE CORE PROBLEM: HOW SMEs PAY FOR EXPENSES
-From my observation and experience , most non-compliance does not arise from tax evasion, it arises from informal payment structures that no longer fit within the current tax regime.
The solution to this is not fear, but restructuring how SMEs procure, pay, and contract.
PRACTICAL RESTRUCTURING MEASURES FOR SMEs TO PLANNING THEIR TAXES UNDER eTIMS regime (PRE-VALIDATION ERA)
1. Procurement of Supplies
Avoid โCheaper plugsโ / informal suppliers and instead deal with suppliers who are eTIMS compliant .
The small saving today is not worth a disallowed expense tomorrow.
2. Casual Labour & Services
Instead of engaging and informally Paying technicians, Cleaners, Plumbers and other cashual workers in cash without any documentation and regards to tax compliance , Consider to Formalize the contract or work with Registered Service Providers
3. Communication Costs
Instead of buying Airtime & bundles casually via M-PESA, register for Postpaid Business Lines.
With this ,monthly eTIMS compliance invoice can be issued
4. Transport & Staff Movement
Instead of getting any available service provider (could be your regular Uber / bolt ride) and pay Cash, consider Corporate Accounts with Bolt /uber โ One that consolidated monthly invoice
5. Deliveries & Logistics
Instead of getting any available service provider for your deliveries (could be your regular boda boda or the local delivery guy who are Informal ) , Get a Registered Courier Companies Or ensure the rider is eTIMS-registered
If they want your business, they must formalize
FINAL Thought TO SMEs on this matter
-Tax compliance is no longer just an accounting issue , it is an operational decision.
Businesses that restructure early will:
-Protect deductions
-Reduce audit exposure
-Improve financial discipline
-Gain credibility with financiers and regulators
Those that donโt will continue arguing that:
โCompliance is impossibleโ
until assessments prove otherwise.
#eTIMS #TaxCompliance #SMEsKenya #BusinessRestructuring #Taxplanning
#BusinessOperations #SupplyChain #RiskManagement