How eTIMS and withholding tax fit together
Withholding tax applies to certain payments, often professional and service fees and some others, where the paying customer deducts a percentage and remits it to KRA on your behalf, paying you the balance. eTIMS is separate: it is how you record the supply with a compliant invoice. The two interact on the same transaction but are not the same thing.
In practice, you issue a compliant eTIMS invoice for the full value of your supply, with the correct VAT where it applies. If the payment is subject to withholding tax, the customer withholds the WHT from what they pay you and issues you a withholding tax certificate, which is your evidence to claim the WHT against your final tax. So you keep two distinct records: the eTIMS invoice you issued, and the WHT certificate you received. Confirm the current WHT rates and which payments are subject with KRA.
Withholding sits alongside eTIMS rather than inside it, and conflating the two is the usual confusion. Your invoice states the full amount due; withholding is something the payer does when settling it, deducting an amount and remitting it on your behalf. The invoice does not change because the payment will be reduced.
What this means practically is that your records have to track two figures per affected invoice: what was invoiced and what was actually received, with the withholding accounted for as tax already paid rather than as a shortfall or a discount. Businesses that record only the received amount lose the credit, which is a real cost. Confirm current rates and which supplies are affected with KRA.
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How to handle a transaction with withholding tax
A practical path for a Kenyan business.
- 1
Issue the eTIMS invoice for the full value
Invoice the full value of your supply through eTIMS with the correct VAT. Withholding is applied to the payment, not by reducing your invoice.
- 2
Let the customer withhold and remit
The customer deducts the WHT, pays you the balance, and remits the WHT to KRA, issuing you a withholding certificate.
- 3
Keep the withholding certificate
Retain the WHT certificate as evidence to claim the withheld amount against your final tax.
- 4
Reconcile both records
Match your eTIMS invoices to the payments and the WHT certificates so your records and your tax position are correct.
- 5
Invoice the full amount regardless
The invoice states what is due. Reducing it to match expected receipt confuses the record and loses the credit.
- 6
Record the withholding as tax paid
Track invoiced and received separately, with the difference accounted for as tax remitted on your behalf, and keep the certificate against the invoice.
Common mistakes to avoid
Reducing the eTIMS invoice by the WHT
The invoice is for the full value; withholding is applied to the payment. Do not understate the invoice by the WHT.
Losing withholding certificates
The WHT certificate is your evidence to claim the withheld amount. Keep every one you receive.
Confusing eTIMS and WHT as one document
They are separate: the eTIMS invoice records the supply; the WHT certificate evidences tax withheld. Keep both.
A consultant handles withholding correctly
A consultant in Nairobi billed a corporate client whose payment was subject to withholding tax. She issued a compliant eTIMS invoice for the full fee with VAT.
The client withheld the WHT, paid her the balance, remitted the WHT to KRA, and gave her a withholding certificate, which she kept to claim against her final tax.
Her eTIMS invoice recorded the full supply and the WHT certificate evidenced the tax withheld, so both her income records and her tax position were correct.
Trading without eTIMS-compliant tax invoices risks KRA penalties, blocked VAT input claims for your customers, and receipts a business buyer cannot expense.
Veira signs every sale to KRA eTIMS automatically, so each receipt is compliant the moment it prints, with no separate device to reconcile.
How Veira makes this simple
Veira is built for Kenyan businesses. It issues compliant KRA eTIMS invoices automatically on every sale, applies the right tax treatment per item, captures the buyer KRA PIN, keeps your records reconciled and ready for filing, and reconciles M-Pesa and Pochi payments to each sale.
It runs on a free handheld terminal or the phone you already own, keeps working offline, and runs from KES 2,999 a month, terminal included on annual billing and a 30-day money-back guarantee. See how Veira works, or book a free demo.
Frequently asked questions
How do eTIMS and withholding tax work together?
Do I reduce my eTIMS invoice by the withholding tax?
What is the withholding tax certificate for?
Which payments are subject to withholding tax?
Does Veira handle this for me?
Where do I confirm the current rules?
eTIMS and withholding tax is straightforward once you know the essentials, and with a compliant system like Veira the day-to-day part is handled for you. See how Veira works, or book a free demo. Reconcile recorded sales against transmitted invoices each month, and most of the compliance question answers itself.
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