Kenya's 2026 tax changes close a gap that once let a freelancer invoice a US or EU client and consider the income "outside Kenya" — and then add a real-time invoicing requirement that makes that income visible to the Kenya Revenue Authority (KRA) the day you issue the invoice.
Two changes matter together: the Significant Economic Presence Tax (SEP) and the eTIMS electronic invoicing mandate. The first decides whether the income is taxable in Kenya; the second decides whether KRA can see it.
SEP Without a Threshold
Kenya's SEP was introduced as a tax on non-resident persons who have a significant economic presence in Kenya, often replacing or complementing the digital service tax. The rate is 3% of gross, and after the 2026 threshold removal, even relatively small cross-border payments are in scope.
For a Kenyan-resident freelancer — a designer, developer, or consultant — SEP is not directly your tax as the provider. Your client may be non-resident, but you are resident, so your income is taxed under the normal individual or corporate rules, not SEP. The SEP change matters to you because:
- Your non-resident client's Kenyan activity may now be taxed via SEP even at low transaction values, and the client may ask you for documentation or may withhold
- Your own foreign-platform income is increasingly cross-checked against SEP and DST data that KRA now collects, closing the gap where foreign-platform income was underreported
- If you operate through a non-resident entity that invoices Kenyan clients remotely, that entity now has SEP exposure without a minimum threshold
The practical effect is that the old "small payments are under the threshold so KRA won't notice" no longer holds — there is no threshold to stay under.
eTIMS for Everyone
Kenya's electronic tax invoice management system (eTIMS) — the successor to the earlier TIMS — became mandatory in 2026 for all businesses, including small and micro enterprises, with few exceptions.
What eTIMS does: Every invoice you issue — including for services to a foreign client — must be generated or recorded through an eTIMS-compatible solution (mobile app, online portal, or integrated accounting software) and transmitted to KRA in near real time. KRA assigns a control unit serial and QR code.
What changes for a freelancer:
- You cannot issue a PDF invoice from a template and email it without also issuing through eTIMS. The eTIMS invoice is the legal invoice; the PDF is a copy.
- Payment from abroad must still be supported by an eTIMS invoice that reflects the gross amount in KES (or the invoice currency with KES conversion), even if the client pays to PayPal, Wise, or a foreign account.
- Allowable deductions and exempt supplies still require the underlying eTIMS-compliant records.
Bookkeeping that keeps eTIMS coherent:
- Issue the eTIMS invoice on the service date, not on the payment date. A March service invoiced in April is March turnover for income tax and for eTIMS.
- Reconcile eTIMS invoices to bank receipts monthly. A foreign payment received without a matching eTIMS invoice is the mismatch KRA's automated cross-check will flag.
- Keep the eTIMS control number in your ledger — not just in the portal — so a future audit can trace invoice → payment → tax return line.
Keep Your Finances Organized From Day One
The threshold removal and eTIMS together mean the same thing: gross income is visible, and gross-based taxes like SEP are collected earlier. The freelancer who invoices through eTIMS on the service date and reconciles to foreign receipts monthly will file a return that matches KRA's data. The one who still issues template PDFs will spend the next year explaining the gap.
Beancount.io keeps each foreign service as a transaction with an eTIMS control number, currency, and KES conversion, all version-controlled and reportable before KRA's data does the reporting for you. Get started for free and make the visible tax a planned tax, not a surprise.