eTIMS for Contractors in Kenya: The Complete 2026 Guide

A contractor bills construction and related works, usually to business clients, developers or government, and almost always in stages: a deposit, progress payments against certified work, and a final payment with retention released later. Each stage is a sale that should issue a compliant eTIMS invoice at the agreed certified point.

Because clients are businesses, they need the contractor's invoice to carry their KRA PIN to claim the cost, and construction works commonly attract withholding tax that the client deducts and remits. Retention, the portion held back until defects liability ends, is the part contractors most often mishandle on invoicing.

VAT and withholding tax for a contractor. Construction and related services are standard-rated for VAT, so a VAT-registered contractor charges VAT on works and shows it on the eTIMS invoice. Works commonly attract withholding tax, where the client deducts a percentage and remits it to KRA, claiming it against the contractor's tax. Materials and labour are part of the contract sum and invoiced as the works.

Retention held back by the client is still part of the contract value and is invoiced according to the contract terms when released. Confirm the current VAT and withholding rules with KRA, and align invoicing with your certificates and contract.

Running a contractor brings its own compliance demands. The specific ones that matter for eTIMS are:

- Works are billed in stages against certificates, each stage a compliant invoice

- Business and government clients need the contractor invoice for their PIN

- Withholding tax and retention must be handled correctly

Get these right and eTIMS runs quietly in the background of your contractor. Get them wrong and you face rejected invoices, disallowed expenses for your customers, and exposure during a KRA review.

Deadlines and penalties for contractors: KRA has phased eTIMS in, and from 2026 the income-validation rules mean an expense not supported by a compliant invoice can be disallowed. For a contractor that cuts both ways. Your own purchases need compliant supplier invoices to be deductible, and your customers need a compliant invoice from you to claim what they spend with you. Non-compliance can attract penalties under the Tax Procedures Act, disallowed input VAT, and lost business from customers who insist on a valid invoice.

There is no separate eTIMS deadline that singles out contractors. The practical answer is that you should already be issuing compliant invoices, because the cost of not doing so, in penalties and lost deductible expenses, grows the longer you wait. Confirm the current deadlines and penalty amounts with KRA, as they change.

What a contractor needs to be eTIMS-ready:

- An active KRA PIN and the correct tax registration for your turnover

- Every product or service mapped to its correct tax treatment

- A reliable way to capture the buyer KRA PIN for business customers

- A compliant system that issues invoices, works offline, and reconciles M-Pesa, so compliance happens as you trade

Record-keeping is the other half of the job. Beyond issuing invoices, a contractor should keep its eTIMS records, and the supplier invoices behind its own purchases, organised and reconciled. KRA can review records going back several years, so the goal is a system where every sale and purchase is already captured and searchable rather than reconstructed from receipts in a drawer. That is the difference between a quick review and a stressful one.

A practical path for a contractor in Kenya. Work through it in order.

1. 1

   Confirm the contractor KRA PIN and VAT status

   Ensure an active KRA PIN and register for VAT if above the threshold, since construction works are standard-rated.

2. 2

   Align invoicing with certificates

   Set up billing so each certified stage of works issues a compliant eTIMS invoice for the certified amount.

3. 3

   Capture the client PIN per project

   Capture the developer, corporate or government client KRA PIN so the invoice supports their claim and any withholding.

4. 4

   Invoice progress and retention correctly

   Issue compliant invoices for each progress payment and handle retention per the contract when released.

5. 5

   Track withholding deducted

   Record withholding tax clients deduct on works so it is claimed against the contractor's tax.

6. 6

   Reconcile and keep records

   Tie payments and certificates to invoices and keep reconciled records so filing summarises real data.

7. 7

   Train whoever rings up a sale

   Compliance only holds if the people taking payment use the system every time. Show staff how to issue a compliant invoice, when to capture a buyer PIN, and how to handle refunds with a credit note, so no sale at your contractor slips outside eTIMS.

8. 8

   Keep records reconciled, then file from real data

   Reconcile sales against M-Pesa, cash and bank as you go, so at filing time your return is a summary of records you already hold rather than a month-end reconstruction. This is where a contractor saves the most time and avoids errors.

9. 9

   Confirm the current rules with KRA

   Rates, thresholds, exemptions and deadlines change. Before relying on a specific figure, confirm the current position for your contractor at kra.go.ke or with your tax adviser, so your invoices stay correct as the rules move.

Veira is built for Kenyan businesses like contractors. It issues a compliant KRA eTIMS invoice automatically on every sale, applies the right tax treatment per item, captures the buyer KRA PIN for business customers, and reconciles M-Pesa and Pochi payments to each sale. It runs on a free handheld terminal or the phone you already own, and keeps working offline, recording sales locally and transmitting to KRA when the connection returns.

For a contractor, that means compliance happens as you trade, not as a separate evening of paperwork. Onboarding takes a weekend, with local support to help you switch from whatever you use now. See how Veira works for contractors, or book a free demo. It runs from KES 2,999 a month, with a free terminal included and a 30-day money-back guarantee.

Switching is low-risk. There is a 30-day money-back guarantee, no expensive hardware to buy, and the system runs on a phone you already own, so a contractor can move from manual or non-compliant invoicing to fully compliant KRA records in a weekend. If you sell across more than one location or counter, Veira keeps every outlet on the same compliant system and the same reporting, so the whole contractor reconciles as one.