30 June 2026 is fast approaching and filing your Income Tax Return is no longer just about completing the return data pack. With new iTax validations around income, expenses, imports, and accounting adjustments, businesses may need to pay closer attention to reconciliations and supporting documentation before filing.

Here are some practical points taxpayers should keep in mind:

1. Income validations are now more data-driven

KRA is validating the total income declared in the Profit & Loss account against:

•  Total eTIMS/TIMS invoices issued
• Gross income reflected in withholding tax certificates (excluding final withholding tax)

The system applies the higher of the two values during validation. While taxpayers may declare a higher turnover, declaring turnover below the amounts supported by eTIMS/TIMS data or withholding tax records may trigger a system validation error and require further review.

2. Expense claims must be supported

Locally incurred expenses are validated against eTIMS/TIMS invoices where the buyer PIN was correctly captured and transmitted. The objective is to ensure that only verifiable expenses are claimed.

However, certain expenses remain excluded from these validations, including:

• Employment costs and emoluments
• Interest expenses and bank charges
• Airline Passenger Ticketing
• Imported goods and imported services
• Investment allowances and certain accounting adjustments
• Provision for bad debts, bad debts written off, depreciation, direct wages, and exchange differences

Businesses should ensure these items are declared under the respective fields in the return; otherwise, they may be subjected to eTIMS/TIMS validations.

For imported goods, expense claims are also validated against customs records through the Integrated Customs Management System (iCMS). Taxpayers can only claim imported purchases up to the value cleared through customs and should ensure, together with their clearing agents, that customs entries are updated to ‘Settled’ or ‘Removed’.

While the system allows taxpayers to claim a lower amount than what is reflected in the customs/Etims system, claims exceeding the records may trigger validation issues

3. Manual Non-eTIMS expenses remain available

Businesses can still claim legitimate expenses that are not supported by eTIMS invoices through the Manual Non-eTIMS/TIMS adjustment process, provided the expenses were wholly incurred in generating taxable income.

Before filing, taxpayers should ensure that the Manual Non-eTIMS/TIMS schedule is completed and uploaded through the relevant iTax adjustment menu prior to submitting the return. The amount uploaded should also reconcile with the amount declared under the Manual Non-eTIMS Expenses field in the tax computation section of the return; otherwise, the system may trigger a validation error.

KRA has also recently introduced a practical enhancement to this process. Previously, taxpayers were required to provide a supplier PIN for every expense uploaded under the Manual Non-eTIMS CSV, which created challenges for expenses incurred with informal traders such as farmers, transport providers, and Jua Kali businesses or where the supplier’s pin was not provided.

With the recent update:

• Supplier PINs are now optional for Manual Non-eTIMS expense uploads
• Supplier PINs can still be included where available and invalid PINs will be flagged for correction
• Missing supplier PINs will no longer prevent taxpayers from claiming valid business expenses

Additional practical reminders:

• VAT-registered taxpayers should upload amounts exclusive of VAT
• Non-VAT registered taxpayers should upload VAT inclusive amounts
• Supporting documentation should be consolidated into PDF format before submission
• The CSV upload allows up to 50,000 line items
• Adjustments can be updated before return submission, with the latest upload being applied

4. Accounting and accrual adjustments

Taxpayers can also capture accounting adjustments such as:

• Deferred income
• Prepayments
• Accrued expenses
• Inventory/cost of sales adjustments
• Grant income adjustments

These adjustments require supporting documentation, including financial statements and schedules. Where these adjustments are utilised, taxpayers should ensure auditor information, including the auditor PIN and ICPAK details, is properly captured.

As with the manual non eTims expenses , the Accounting and Accrual Adjustments schedules should be uploaded before filing and should align with the amounts captured in the return.

Conclusion: Do not leave filing until the last minute

The filing process is becoming increasingly integrated and data-driven. Early reconciliations and proactive reviews may save significant time and avoid unnecessary filing challenges.

One important consideration: once a self-assessment return is submitted, additional return adjustments cannot be uploaded. KRA also performs post-filing validations, reviewing information declared against eTIMS data, customs records, and additional schedules submitted.

Need support reviewing your 2025 tax position or navigating the new validation requirements? Feel free to reach out to us at info@skm.co.ke and our tax experts will be glad to assist.