Understanding KRA 2026 Validation Framework and How Kenyan Businesses Can Stay Ready

Here’s What’s Happening

Starting January 1st, 2026, KRA is changing the game. They’re introducing the KRA 2026 Validation Framework which is a new system that will automatically check whether the income and expenses you declare on your tax returns match what’s in their records.

Think of it like this: KRA now has multiple sources of information about your business—your eTIMS invoices, import records, withholding tax details—and they’re going to compare everything. If things don’t add up, you’ll have some explaining to do.

Bottom line? If you’re not keeping proper digital records, 2026 is going to be a tough year.

Why Should You Care?

Let’s be honest—many businesses have gotten away with “flexible” record-keeping. Maybe some cash sales here, a few expenses without proper receipts there. Those days are ending.

Here’s what could happen if you’re not ready:

1. Your tax return gets rejected – You’ll have to redo it with proper documentation
2. KRA shows up for an audit – Nobody wants this kind of attention
3. Penalties and fines – For inadequate documentation or mismatched records
4. Your competition gets ahead – While you’re dealing with KRA, businesses that prepared early are running smoothly

The good news? You have time to get ready. And it’s not as complicated as it sounds.

What Exactly Will KRA Be Checking?

KRA will cross-check four main things:

1. Your eTIMS/TIMS Invoices
   Every sale you make through eTIMS will be compared to what you declare as income. If you issued an invoice for Ksh 100,000 but only declared Ksh 80,000, KRA will know.
2. Buyer PIN Numbers
   Your invoices must include your customer’s KRA PIN (when required). No PIN, no valid invoice. No valid invoice, no expense claim allowed.
3. Import Records
   Did you import goods or equipment? KRA will check if what you claimed as an expense matches what customs recorded. Every container, every shipment.
4. Withholding Tax
   If someone deducted withholding tax from your payment, or if you deducted it from someone else, those amounts will be verified against what you declared.

How to Get Your Business Ready (The Practical Stuff)

Don’t panic. Here’s your action plan, broken down into simple steps:

Sort Out Your Invoicing System

• Make sure you’re issuing ALL sales through eTIMS/TIMS—no exceptions
• Double-check that your invoices capture buyer PINs when needed
• Confirm your invoices are actually being transmitted to KRA (not just sitting in your system)

Pro tip: Do a spot check right now. Pull up last month’s invoices and verify they went through.

Clean Up Your Import Records

If you import anything—stock, equipment, raw materials—match those imports to your expense claims. Get your paperwork in order:

• Customs entry numbers
• Import duty receipts
• Shipping documents
• Purchase invoices

Create a simple folder (physical or digital) for each import shipment.

Get Your Withholding Tax Right

Check that every withholding tax deduction is properly recorded. If you paid a contractor Ksh 50,000 and deducted Ksh. 2,500 as withholding tax, make sure both amounts are in your records and match what KRA has.

Document Every Expense

For every expense you want to claim:

• Get a valid electronic tax invoice
• Make sure it has the buyer PIN (yours) on it
• Keep supporting documents (contracts, delivery notes, etc.)

If your supplier isn’t giving you proper e-invoices, have that conversation with them now.

Reconcile Your Numbers

Before filing your 2025 tax return, do a simple check:

• Add up all your eTIMS sales = Does it match your declared income?
• Add up all your e-invoiced purchases = Does it match your claimed expenses?
• List all your imports = Do they match your expense records?

If anything doesn’t match, fix it now rather than explaining it to KRA later.

Train Your Team

Your accountant needs to understand this. Your sales team needs to understand this. Even your procurement officer needs to understand this. Have a simple meeting and make sure everyone knows:

• Every sale must go through eTIMS
• Every purchase needs a proper invoice
• Buyer PINs must be captured

Talk to Your Suppliers and Customers

Send a simple message to your regular suppliers: “Please make sure all invoices you send us are electronic invoices with our PIN captured.”

If you sell to businesses, let them know you’ll need their PIN for all invoices moving forward.

Special Notes for Specific Businesses

If You Import Equipment or Goods

Your import records will be heavily scrutinized. Make sure customs declarations match your expense claims. Keep everything—bills of lading, customs forms, duty payment receipts.

If You Have Service Contracts

All those monthly service fees you charge? Proper e-invoices with buyer PINs. All those maintenance contracts you pay for? Get proper e-invoices with your PIN.

Common Questions (Straight Answers)

Q: When exactly does this start? January 1, 2026. It will apply when you file your 2025 tax return.

Q: Does this apply to my small business too? Yes. Small, medium, large—everyone.

Q: What if I claimed an expense but don’t have a proper invoice? KRA can disallow that expense. You’ll pay more tax, plus potential penalties.

Q: Can I just wait and see what happens? You could, but why risk it? The businesses that prepare early will have the smoothest transition.

Q: Is KRA really going to check every single transaction? They’ll use automated systems to flag mismatches. So yes, potentially every transaction could be checked.

The Real Talk

Look, we know change is hard. And dealing with KRA can be stressful. But here’s the thing—this validation framework is actually going to make life easier for honest businesses. Once you get your systems right, filing returns becomes straightforward. No more guesswork, no more anxiety about what KRA might find.

The businesses that struggle will be the ones that wait until the last minute or hope it won’t affect them.

What to do this week:

• Check if your invoicing system is eTIMS-compliant
• Review last month’s records for any gaps
• Have a conversation with your accountant
• Make a list of suppliers who aren’t giving you proper invoices

What to do this month:

• Train your team on the new requirements
• Reconcile your import records with your expenses
• Contact suppliers about proper e-invoicing
• Set up a simple system to check your records weekly

How Pergamon Can Help

At Pergamon Group Ltd, we’ve been helping Kenyan businesses stay compliant with KRA requirements for years. We provide:

• KRA-compliant fiscal devices and eTIMS-ready systems
• Ongoing support to keep you compliant

The 2026 validation framework doesn’t have to be scary. With the right preparation and the right partner, you’ll be ready.

Need help getting your business validation-ready? Reach out to us. We’re here to make compliance simple.

Stay compliant. Stress-free, and in business.

Pergamon Group Ltd Your partner in navigating Kenya’s evolving tax landscape