Buyer-initiated invoices for small suppliers and farmers
When a Kenyan buyer must raise the eTIMS invoice for a small supplier or farmer, how it is done on eCitizen or by USSD, and how to record it in your books.
By Achekam · · 4 min read · For Running a business businesses in Kenya
A dairy buys milk from dozens of smallholders. A hotel buys vegetables from market traders. A transporter hires boda boda riders for deliveries. None of these suppliers has an invoicing system, and many never will. Yet the buyer needs a valid electronic tax invoice for each purchase, or the cost may not count as a deductible expense.
KRA's answer is buyer-initiated invoicing: the buyer raises the eTIMS invoice on the seller's behalf, and the seller confirms it. For a business that buys from small suppliers, this is not optional housekeeping. This article explains when the rule applies, how to raise the invoices, what can go wrong, and how to keep the purchases straight in your own books.
The rule: the buyer invoices for small sellers
KRA says that where a supply comes from a small business or small-scale farmer whose annual turnover does not exceed five million shillings, the purchaser must issue the tax invoice on the seller's behalf, using the Buyer Initiated Invoicing solution on eCitizen.
KRA's guidelines describe the arrangement as being for sellers who cannot issue an invoice themselves, giving small-scale farmers supplying processors or exporters, and informal traders without invoicing systems, as examples.
The legal footing, as KRA explains it, is in two places. KRA cites section 16(1)(c) of the Income Tax Act as requiring eTIMS electronic invoicing for expenses to be deductible, and section 23A(3A) of the Tax Procedures Act as allowing a purchaser to issue an electronic invoice on behalf of a small-scale seller. Without a valid invoice, the purchase is at risk; see expenses at risk without eTIMS invoices.
When it is blocked
KRA says the eTIMS system blocks buyer-initiated invoices for VAT-registered sellers. If your supplier is registered for VAT, it must issue its own electronic tax invoice, and you cannot raise one for it. Ask for theirs, and check it as described in checking a supplier's eTIMS invoice.
Raising the invoice on eCitizen or *222#
KRA says buyers reach buyer-initiated invoicing through the Buyer Initiated Module of their KRA profile on eCitizen, or by dialling *222#. For each invoice, the buyer enters:
- the seller's ID number or PIN;
- the invoice number and date;
- a description of what was bought;
- the unit price and quantity;
- the total.
For many purchases at once, KRA says a .csv file can be uploaded instead. A dairy collecting milk from many farmers each week will find the file upload far more practical than keying invoices one by one.
Here is how that might look in practice. The dairy's collection clerk records each farmer's litres on the collection sheet every morning. At the end of the week, the office turns the sheet into one line per farmer: ID number, the week's litres, the agreed price per litre and the total. That file is uploaded to the Buyer Initiated Module, each farmer gets a notification to accept, and the same totals become the week's bills in the dairy's books. One source, the collection sheet, feeds both eTIMS and the ledger.
The seller then receives a notification and accepts or rejects the invoice. What happens on the seller's side, including the thirty-day window, is set out in a buyer raised an eTIMS invoice for you.
KRA's buyer-initiated invoicing page carries the taxpayer guidelines, including how buyers access the module and what each invoice must contain.
Misuse and the risk of losing eTIMS access
KRA warns that misuse or fraud involving buyer-initiated invoices will lead to immediate deactivation of the buyer's eTIMS by the Tax Service Office. For a business that invoices its own customers through eTIMS, losing access is a serious operational problem, not just a tax one.
Practical safeguards:
- Raise invoices only for real purchases, with quantities and prices that match the delivery.
- Never use the module for VAT-registered suppliers, or for suppliers above the turnover line.
- Keep delivery notes, weighbridge tickets or collection sheets that support each invoice.
- Limit who in the business can raise these invoices, and review them regularly.
Recording the purchase in Achekam
The eTIMS invoice and your own books should tell the same story. In Achekam, a business records supplier bills line by line with VAT. A bill raised without a purchase order waits for approval before it posts, and it can be paid in full or in parts from a chosen bank account. Recording each farmer's delivery as a bill, then paying it, gives you the purchase in the ledger and a trail from delivery to payment.
Be aware of one current limit: supplier bills and purchase orders do not yet use a Kenyan business's own VAT rate. They offer 15% or 0% and default to 15%. Purchases from small sellers who are not registered for VAT should be set to 0% on the bill.
Where you receive paper or scanned documents, uploading them to Financial Intake turns them into suggested postings. AI can suggest the entry, but only a person approves and posts it.
Achekam also lists a Kenyan business's supplier invoices that have no eTIMS reference recorded. Run that list before you file, so any purchase still missing its buyer-initiated invoice is caught while it can be fixed.
A buyer's checklist before paying a farmer or informal trader
- Is the seller registered for VAT? If yes, ask for their invoice; you cannot raise one.
- Is the seller a small business or small-scale farmer within the turnover line?
- Do you have the seller's ID or PIN, correctly recorded?
- Does the quantity and price match the delivery record?
- Have you raised the buyer-initiated invoice and has the seller accepted it?
- Is the bill in your books, at the right VAT setting, with the eTIMS reference?
- Only then, pay.
Put step five before payment in your process. Once the money has gone, getting a supplier to accept an invoice is much harder.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
