In Kenya’s older tax structure, the easiest people to monitor were salaried workers and registered companies with fixed addresses, accounting departments and visible supply chains. That model is under pressure from a commercial environment increasingly built around mobile money, informal retail networks and businesses operating through smartphones instead of storefronts.
The Kenya Revenue Authority is responding by rebuilding parts of its compliance system around digital transaction tracking. Electronic invoices, automated filing tools, chatbot support and mobile-based tax services now sit at the centre of that effort.
George Omondi Obell, who heads the KRA’s Micro and Small Taxpayers Department, has become one of the main architects behind the transition. His department is tasked with expanding tax participation among small businesses and traders that have historically remained difficult to capture inside formal reporting systems.
The strategy rests on a practical observation. Commercial activity changed faster than the administrative machinery designed to monitor it.
“Tax follows what is happening in the market,” Mr Obell says.
That idea increasingly explains why the Authority is investing less energy in paper-heavy procedures and more in systems capable of reading transactions as they happen.
KRA is trying to reduce the friction around compliance
Many small businesses interact with government systems through mobile phones rather than desktop portals. Yet for years, filing taxes often required navigating platforms built with formal businesses in mind.
Inside the KRA, officials concluded that complexity itself had become part of the compliance problem.
Registration processes, filing procedures and payment systems frequently demanded technical familiarity that many small operators did not have. Traders working outside major commercial centres faced additional barriers tied to internet access, documentation requirements and platform usability.
“The process of registration, the process of filing, the process of payment, they are all very complicated,” Mr Obell says.
The Authority’s response has been to reposition tax administration closer to the tools people already use daily. Mobile-access filing systems, WhatsApp communication channels, simplified digital returns and automated reminders are now part of the infrastructure the KRA is building around smaller taxpayers.
According to the Authority, more than 1.3 million taxpayers are using the simplified systems.
That number matters because it reflects a broader institutional recalculation taking place inside the revenue agency. The KRA is increasingly treating ease of compliance as a revenue issue rather than a customer-service issue.
eTIMS is becoming the operating layer beneath the tax system
The Electronic Tax Invoice Management System, known as eTIMS, has emerged as the most visible component of the KRA’s digital expansion.
The platform allows businesses to generate invoices linked directly to tax records, giving the Authority greater visibility into commercial transactions and purchase claims across supply chains.
KRA figures show about 680,000 businesses have already onboarded onto the system. A large portion entered through mobile-based tools designed for smaller enterprises.
The implications extend beyond invoicing.
Electronic verification allows tax administrators to compare sales declarations, inventory movement and expense claims with greater speed than traditional audit models built around physical documents.
The Authority has intensified engagement in trading centres where invoice gaps remain common.
That focus recently became visible in Nairobi’s Eastleigh district after consultations between KRA officials and business representatives over persistent complaints from traders struggling to obtain compliant invoices for expense claims.
“Many businesses across the country source goods from Eastleigh but face challenges in obtaining eTIMS invoices, which are critical for expense claims,” Mr Obell said following the discussions.
For the KRA, invoice visibility is tied directly to how accurately transactions can be monitored across the economy.
The push toward digital enforcement grew out of international tax work
Mr Obell’s professional background helps explain the Authority’s emphasis on technology-led compliance.
Before taking over the Micro and Small Taxpayers Department, he spent years working in international taxation, transfer pricing and cross-border commerce. His assignments later expanded into advisory work connected to the United Nations, the Organisation for Economic Co-operation and Development and the African Tax Administration Forum.
Those roles exposed him to tax systems already using electronic invoicing and transaction-monitoring frameworks long before Kenya adopted similar models.
The experience also shaped how he views modern enforcement.
“You cannot for a moment begin asking for papers,” he says.
That comment reflects a wider reality confronting tax agencies globally. Many businesses now operate through software ecosystems where payments, logistics, procurement and billing happen digitally and often across multiple jurisdictions simultaneously.
Traditional audit practices built around physical paperwork are becoming less effective in those environments.
Political pressure is accelerating the search for new taxpayers
The KRA’s technological overhaul is unfolding at a time when government finances remain under strain and resistance to new taxes has intensified.
President William Ruto entered office in 2022 arguing that tax administration had become overly punitive and counterproductive to broader compliance.
“A huge obstacle to the realisation of our national revenue target is that in practice, tax administration has traditionally been a repressive, menacing affair which resembles extortion,” President Ruto said during the early months of his administration.
Mr Obell was later appointed to lead the Micro and Small Taxpayers Department as the government expanded efforts to widen the tax base without relying entirely on additional tax measures.
That assignment places the KRA inside a difficult balancing act.
The informal economy supports millions of Kenyans operating in sectors already facing weaker consumer demand, higher operating costs and thin profit margins. Aggressive enforcement carries political risk. Weak enforcement leaves government revenue under pressure.
Technology has increasingly become the compromise mechanism between those competing pressures.
The expansion is also raising concerns about surveillance and privacy
As the KRA deepens real-time transaction monitoring, criticism around data handling and confidentiality has also grown.
Healthcare professionals raised concerns after proposals connected to electronic invoicing generated fears that sensitive patient information could become exposed within digital reporting systems.
Civil society groups have similarly questioned how much commercial visibility the state should possess as invoice tracking, payment systems and stock movement monitoring become increasingly integrated.
The Authority argues that resistance was expected during the transition.
“Resistance is normal,” Mr Obell says.
KRA officials say they have introduced phased implementation measures alongside alternative compliance tools aimed at businesses operating without smartphones or stable internet access.
One such system allows buyers to generate invoices on behalf of suppliers unable to issue electronic receipts themselves.
At the same time, the Authority is developing “UshuruGPT,” an internally built artificial intelligence assistant intended to guide taxpayers through filing requirements and compliance procedures through conversational support.
The broader objective inside the KRA stretches beyond simplifying returns.
The Authority is attempting to build a continuously connected reporting environment where invoices, payments, inventory and business activity can be verified against one another in near real time.
That transition could eventually alter how the Kenyan state observes commercial activity across the informal economy, especially in sectors that previously operated with limited institutional visibility.
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