Business documents in Kenya

The Business Registration Service handles company and business name registration in Kenya, and applications are made online through the eCitizen platform. Most SMEs choose either a business name (sole proprietorship or partnership) or a private company limited by shares under the Companies Act, 2015. Professional firms often use a limited liability partnership, and foreign companies trading in Kenya register as a foreign company with a local presence.

A newly incorporated company receives a certificate of incorporation, and its directors and shareholders appear on the BRS register. When a bank, landlord or procurement department wants to confirm who runs the company, they ask for an official search — widely known in Kenya as a CR12 — so keep a recent one available. Companies must also maintain a register of beneficial owners and keep their BRS records, including annual returns, up to date.

Once registered, the business obtains or links its KRA PIN, and the company’s PIN certificate becomes one of the most-requested documents in Kenyan commerce. A typical supplier registration pack contains the certificate of incorporation, CR12, KRA PIN certificate, a tax compliance certificate, the county business permit and a company profile.

KRA identifies taxpayers by their Personal Identification Number (PIN), obtained on iTax; there is no separate VAT number. VAT registration is compulsory once taxable supplies reach KSh 5 million in a twelve-month period and must be done within 30 days of crossing it; smaller businesses may register voluntarily. The general rate is 16%, with zero-rated supplies listed in the Second Schedule of the VAT Act, 2013, and certain supplies exempt. VAT returns and payment are due on or before the 20th day of the following month, filed on iTax.

Section 23A of the Tax Procedures Act, added by the Finance Act 2023, requires every person in business to record sales and issue and transmit invoices electronically. KRA applied the requirement from 1 September 2023 and, from 1 January 2024, disallowed income tax deductions for expenses not supported by an electronic tax invoice. Some costs are excluded — salaries, imports, air tickets, interest, bank charges, expenses subject to final withholding tax and services bought from non-residents without a Kenyan permanent establishment.

The Tax Procedures (Electronic Tax Invoice) Regulations, 2024 (Legal Notice 64 of 2024) set out what an eTIMS invoice must show (see the table). The buyer’s PIN is only mandatory if the buyer intends to claim the expense or input VAT — which is why business customers will always ask for it to be included. Credit and debit notes must reference the original invoice number, and KRA’s VAT guidance requires a credit note for returns or price reductions to be issued within six months of the original invoice.

KRA offers several free eTIMS options: eTIMS Lite for non-VAT taxpayers (including USSD via *222# and a web version on eCitizen), an eTIMS client app, an online portal for service-only businesses issuing a small number of invoices a month, and OSCU/VSCU integrations for businesses with their own billing or ERP systems. Where a small seller cannot invoice, KRA allows buyer-initiated (reverse) invoicing with the seller’s consent.

Kenyan procurement runs on a predictable chain: the buyer requests quotations (often three, for internal approval), issues a Local Purchase Order (LPO) or Local Service Order (LSO) for services, receives goods against a signed delivery note, and pays against the eTIMS invoice. Quotations and pro-forma invoices are not tax invoices, so they do not go through eTIMS — but they should already show prices exclusive of VAT, the 16% VAT and the total, so the final invoice matches what was approved.

Because the eTIMS invoice carries only the essential fiscal fields, many businesses attach a covering document — a branded invoice summary or statement — that adds bank details, M-Pesa paybill or till number, payment terms and the LPO reference. That is fine, provided the eTIMS invoice is the one the customer uses for tax purposes and the amounts agree.

Payments in Kenya are dominated by M-Pesa and bank transfers. A receipt or payment acknowledgement should show the M-Pesa or bank reference and the invoice it settles. For petty cash and supplier payments without a formal invoice, a payment voucher signed by the recipient creates the internal trail auditors look for — though remember that, for income tax purposes, the expense still needs an eTIMS invoice unless it falls within an exclusion.

The Employment Act, 2007 requires written contracts for employment beyond short casual engagements, setting out the job, pay, working hours, leave and notice. Kenyan practice is an offer letter followed by a signed contract, with probation terms stated clearly. Employers must give employees itemised pay statements, and at the end of employment the employee is entitled to a certificate of service confirming the employer, dates and the work done.

Every payslip in Kenya carries several statutory deductions. PAYE is remitted to KRA. Pension contributions go to the National Social Security Fund under the NSSF Act, 2013, whose tiered contributions have been phased in over several years. Health contributions go to the Social Health Insurance Fund, administered by the Social Health Authority, which replaced NHIF in 2024. The Affordable Housing Levy is deducted from employees and matched by employers, and is collected by KRA. Because rates and contribution limits for these schemes have changed several times recently, take the current figures from NSSF, SHA and KRA rather than from an old payroll template.

Other HR documents in everyday use include employment verification letters for banks and SACCO loans, warning letters before any disciplinary dismissal, and clearance forms when staff leave. Keep employment records, payroll and statutory remittance evidence together; KRA and the statutory funds can audit them.

Kenyan contract law follows common-law principles, so a properly signed service agreement, supply contract or NDA is binding between businesses without notarisation. Identify each party by its registered name and KRA PIN, specify whether amounts are VAT-inclusive, and include a dispute clause — many commercial contracts refer disputes to arbitration in Nairobi.

Stamp duty is a separate consideration: leases, transfers, debentures and certain other instruments attract duty, which KRA administers, and an unstamped instrument can face problems if it has to be produced as evidence. Electronic signatures are widely used for commercial agreements, but documents that must be registered — land and some security documents — follow their own signing and stamping procedures. Check the current position with KRA or an advocate before signing a high-value agreement.

KRA’s Customs and Border Control department clears goods under the East African Community’s customs framework, and Kenya’s trade permits and declarations are coordinated through the Kenya National Electronic Single Window operated by KenTrade. Importers typically lodge an Import Declaration Form before shipment, obtain any required permits from bodies such as KEBS or the Kenya Plant Health Inspectorate Service through the single window, and clear goods with a licensed customs agent.

The commercial invoice, packing list and bill of lading or air waybill are the core shipping documents, and their descriptions, quantities and values must agree with the declaration. Imports are among the transactions excluded from the eTIMS invoice requirement — customs documents support the expense instead — so keep them carefully with the related payment records.

Exporters prepare a commercial invoice, packing list and transport document, plus a certificate of origin when the buyer claims preferential duty under the EAC, COMESA, the AfCFTA or another trade arrangement. Confirm with your clearing agent or KenTrade which certificate and issuing body apply to your destination before shipping.

KRA requires registered persons to keep records supporting every transaction, on paper or electronically, in English or Kiswahili, for five years. For VAT purposes that means sales and purchase invoices, credit and debit notes, import documents and the records behind each return. eTIMS keeps a copy of your invoices on the taxpayer portal, but your own records must still allow KRA to trace each sale from quotation and LPO through to payment.

Only one original tax invoice may be issued per supply; if a customer loses theirs, issue a copy clearly marked as a certified copy rather than a fresh invoice. Foreign-currency invoices are common for exporters and international clients, but returns are filed in shillings, so record the exchange rate used for each transaction.

The commonest issue Kenyan businesses face is a customer rejecting payment because the invoice did not come from eTIMS or omitted the buyer’s PIN. Another is a mismatch between the LPO, delivery note and eTIMS invoice — different item descriptions or quantities trigger queries in the buyer’s accounts department. Agree item names and units with regular customers and reuse them.

Treat this page as a starting point: KRA, NSSF and SHA update rates and procedures through public notices, so confirm current requirements with KRA or your tax agent before relying on them.