KRA is making your life easier. Reverse invoicing, how-to guide

Here are 3 practical scenarios where reverse invoicing changes everything:

🔄 1. You import services (consulting, software, online advertising)

The rule is simple: if you receive services from a non-resident supplier in Kenya, you must "self-invoice" the VAT . You calculate 16% on the amount, declare it as output VAT, and recover it as input VAT in the same return .

Concrete example: You pay KES 100,000 for US SaaS software. You issue a reverse invoice for KES 100,000 + 16,000 VAT. You declare 16,000 as output tax AND input tax. The net effect is neutral for you. But KRA collects the VAT that would have escaped the tax net . If you don't, penalties can reach KES 100,000 or 10% of the tax due .

📋 2. You buy from small suppliers (under KES 5 million turnover)

If your supplier is a small trader, farmer, or artisan without an eTIMS device, you can issue the invoice on their behalf via the eCitizen portal . This is "Buyer-Initiated Invoicing."

Concrete example: You buy vegetables for KES 50,000 from a local farmer. You log into eCitizen, enter their KRA PIN, generate the invoice. They receive a notification and give consent via USSD (*222#) . The invoice is recorded in eTIMS as if they issued it. You can claim input VAT. They stay compliant without investing in an invoicing system .

⚠️ 3. A clarification: reverse invoicing ≠ VAT reverse charge

Don't confuse the two concepts. Reverse invoicing is an administrative mechanism: the buyer issues the invoice on behalf of the seller. The VAT reverse charge is a tax mechanism: VAT is declared by the buyer (case of imported services) . They can combine, but they're not interchangeable.

Tip: Reverse invoicing for small suppliers only applies to suppliers with annual turnover below KES 5 million who are not VAT-registered . If your supplier is VAT-registered, they must issue their own eTIMS invoices.

Do it now: Log into eCitizen. Go to the "Reverse Invoicing" or "Buyer-Initiated Invoicing" section. Try generating an invoice for your next purchase from a small supplier. 15 minutes is enough.

Sources: Kenya Revenue Authority – eTIMS Buyer Solution Guidelines; VAT Act 2013, Section 10(4); Tax Procedures Act 2015, Section 23A(3A); KRA Public Notice on Reverse Invoicing (2026).

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