In a public notice dated September 4, 2026, Kenya Revenue Authority (KRA) told all businesses using TIMS and eTIMS to keep accurate and up-to-date stock records.
The records must account for goods purchased or received, sold, transferred, returned, adjusted or otherwise disposed of. KRA says this will improve the accuracy of tax returns and reporting.
The aim is sound. Stock is where sales, purchases and costs meet, and a system that links the three can expose under-declared income and inflated expenses. For a trader, it works neatly: what comes in as a unit goes out as the same unit.
Manufacturers are different. A manufacturer buys one thing and sells another. Raw material goes into a process, some is lost to wastage and evaporation, some sit as work in progress, and what leaves the factory is a different product, often in a different unit. No invoice records that transformation. The invoice shows the input coming in and the finished good going out.
Take a simple example. A business buys 100 kilogrammes of raw material. Under normal conditions, 92 kilogrammes become finished product and eight are lost as expected wastage.
The books are right. A system that expects stock to match purchases and sales, with no model for yield, may see eight kilogrammes unaccounted for. Multiply that across thousands of transactions and the system flags an ordinary production variance as a discrepancy.
That matters because flags invite questions. An unexplained stock variance can quickly become a tax question, including whether sales have gone unrecorded. Manufacturers already know how hard it is to argue otherwise after the fact, when production returns have been mistaken for new stock.
Even well-run factories do not produce identical yields every month. Machine efficiency, raw material quality and seasonality all move the numbers. A fixed standard cannot be the final word on what counts as acceptable.
KRA indicated that consultative forums with the business community would commence in September to hear implementation challenges and recommendations. As the framework continues to take shape, manufacturers should use the consultation process to make specific asks.
There are four.
First, recognise manufacturers separately. The functionality should allow for bills of materials, so that inputs are linked to outputs through standard yields, and not assume one item in and the same item out.
Second, build in tolerance. Wastage and yield variance within a reasonable band should not be flagged. The band should be set with industry input and reviewed as processes change.
Third, give taxpayers a clear way to adjust and explain. If stock is adjusted for wastage, damage or rework, the system should record the reason and keep a trail, so the explanation exists when KRA asks.
Fourth, publish a timeline. Businesses need time to adjust their systems and processes before enforcement. Many stock systems were not built to feed eTIMS, and integration takes time and money.
None of this is an argument against stock controls. Better data helps honest taxpayers as much as it helps the revenue authority. But a system designed around the shop floor of a trader will misread the factory floor, and the cost of that misreading will fall on the businesses that make things, employ people and pay tax.
Manufacturers should take KRA at its word and speak now, while the framework can still be shaped around how factories actually operate.