eTIMS, PAYE, NSSF & SHIF: Compliance Features Your ERP Must Have
eTIMS, PAYE, NSSF, SHIF, housing levy, withholding — the compliance features that must be built into your ERP, what each one actually requires, and the test questions for vendors.
Kenyan compliance is not a report you print at year-end; it is a property of every invoice you issue and every payslip you run. When compliance is built into the system, it happens as a by-product of normal work. When it is bolted on — spreadsheets beside the system, manual portal entry, "we'll file it later" — every deadline is a scramble and every rule change is a risk. Here is what "built in" concretely means, feature by feature.
eTIMS: electronic invoicing
KRA's eTIMS regime means sales invoices are transmitted electronically and buyers increasingly refuse non-compliant invoices — they can't claim the input VAT without them. Your system must:
- Generate compliant invoices from normal sales flow — POS and invoicing alike, not a separate re-entry step.
- Handle credit notes and corrections through the compliant channel too, since reversals are where manual processes break.
- Keep working when connectivity fails and transmit when it returns — a till that stops selling when the internet drops is not a solution.
- Reconcile what was transmitted against what was sold, so gaps surface before KRA finds them.
Payroll: the statutory stack
Four deductions, each with its own rules and its own history of mid-year changes: PAYE (graduated bands, taxable-benefit rules), NSSF (tiered contributions that have changed repeatedly), SHIF (percentage of gross, replacing NHIF logic), and the affordable housing levy (both sides, employer and employee). The system requirements:
- Current rates maintained in the product and shipped as updates — you should never edit a tax band yourself.
- Filing-ready outputs for each return, matching what the portals expect.
- The reconciliation triangle: payroll register, filings, and ledger postings agreeing monthly — the discipline covered in our NGO payroll guide applies to every employer.
Withholding tax
Paying certain suppliers — professional services, rent, and others — makes you a withholding agent. The system should flag withholding-liable supplier payments, compute the deduction at source, and produce the remittance schedule. Manual withholding is the quiet penalty generator: nobody forgets to pay a supplier, everybody forgets to withhold.
The records layer
- Seven-year retention of transaction records, retrievable — not archived into oblivion.
- Audit trails: who created, edited, approved, and deleted, with timestamps.
- Statements and reports that agree with filings, because they come from the same data.
The vendor test
Ask any vendor three questions: "Show me an eTIMS credit note, end to end." "When NSSF bands last changed, how did customers get the update, and when?" "Show me the withholding report for a mixed supplier payment run." Fluent answers mean built-in; hesitation means bolted-on.
Compliance capability should weigh heavily in your selection — it is the feature set you cannot postpone. Fold these checks into the ten questions for choosing a provider, and pressure-test the pricing implications with our ERP pricing guide: compliance sold as paid add-ons changes the three-year math.
Compliance as a by-product
AWRA OpsHub ships eTIMS-compliant invoicing and current statutory payroll for Kenya — updates included, scrambles excluded.
See ERP built for KenyaFrequently asked questions
Does every business need eTIMS?
The mandate has expanded to cover VAT-registered businesses broadly, and non-compliant invoices cost your buyers their input VAT claims — which means even where edges exist, commercial pressure closes them. Assume you need it and verify your specific situation with your tax advisor.
Can we keep payroll in a separate system from operations?
You can — many do — but you inherit the integration gap: statutory costs missing from project budgets, payroll journals retyped into the ledger, and two systems to reconcile against filings. If both live on one platform, the triangle reconciles itself.
Our accountant handles compliance. Why does the system matter?
Your accountant files what your records support. When records are reconstructed monthly, the accountant's time goes into reconstruction instead of review — and errors ride along. Good systems make your accountant faster and your filings defensible.
What penalties are we actually exposed to?
Late or missing statutory filings carry per-return penalties and interest that compound monthly; eTIMS non-compliance costs you customers before it costs you fines. The bigger exposure is an audit that finds systematic gaps — that reopens prior years. Current penalty figures change; the structural fix doesn't.
