Kenya Eyes Easier Tax Steps for Small Businesses

Kenya is considering a new arrangement that could make tax compliance easier for small businesses and ordinary traders, particularly those who receive payments through mobile money platforms.
The Kenya Revenue Authority (KRA) is in discussions with telecommunications company Safaricom to allow its M-Pesa platform to generate electronic tax invoices on behalf of small businesses. The proposed arrangement is designed to reduce the difficulties traders face when meeting digital tax requirements.
According to a report published by The Star Kenya on October 29, 2026, the discussions are still at an early stage. If approved, the arrangement could help small traders spend less time handling tax paperwork and make it easier for them to do business with larger companies.
What the New Plan Says under the proposed plan, Safaricom would generate electronic tax invoices for small businesses that receive payments through M-Pesa tills, paybills and other merchant payment services.
The invoices would be transmitted to KRA, allowing the tax authority to keep records of business transactions without requiring every small trader to handle the invoicing process independently. The proposal is particularly important for micro and small businesses that struggle with the technical requirements of electronic invoicing. Some larger companies have reportedly stopped working with small suppliers who cannot provide the required electronic tax invoices. The proposed arrangement could help these traders regain access to bigger business opportunities.
However, the partnership has not yet been finalised, so traders should not assume that the new arrangement is already operational.

How Digital Invoices May Work
The proposed arrangement will build on Kenya's Electronic Tax Invoice Management System (eTIMS), a digital platform introduced by KRA to improve the recording and reporting of business transactions.
With the proposed M-Pesa arrangement, Safaricom would generate invoices on behalf of participating merchants and send the records to KRA, potentially at the end of each business day.
For example, a small shop owner who sells goods and receives payments through an M-Pesa till may no longer need to generate every electronic invoice manually if the proposed system is implemented.
KRA would also benefit from having better access to transaction records, helping it monitor business activities and reduce tax evasion.
KRA already provides simplified eTIMS options for small businesses, including mobile and web-based invoicing services. Its existing guidance also provides for buyer-initiated invoicing when purchasing from qualifying small businesses.

Why Small Businesses May Care
Small businesses are an important part of Kenya's economy, providing jobs and supporting millions of households.
For ordinary traders, complicated tax procedures can take valuable time away from running their businesses. Some also lack the technology, knowledge or resources needed to manage electronic invoicing independently.
The proposed arrangement could offer several benefits:
Less paperwork: Traders may spend less time preparing and submitting electronic invoices.
Easier business transactions: Small suppliers could find it easier to work with larger companies that require electronic tax invoices.

Better record keeping: Digital invoices could help business owners track their sales and payments.

Improved tax compliance: Automatic invoice generation could reduce mistakes and make tax reporting more convenient.
However, businesses will still need to understand their tax responsibilities and keep proper financial records.

A Step Towards Supporting Small Traders
The discussions between KRA and Safaricom represent an important step towards making digital tax compliance more accessible to small businesses.
While the government wants to improve tax collection and reduce revenue losses, making compliance simpler could also help ordinary traders operate more efficiently and grow their businesses.
The success of the proposal will depend on how easily traders can access the service, how much it costs and whether the system protects their transaction information.
For Kenya's small business owners, the biggest benefit could be a tax system that makes it easier to concentrate on selling goods, serving customers and expanding their businesses rather than struggling with complicated paperwork.