The Kenya Revenue Authority (KRA) is in discussions with Safaricom over a proposed arrangement that would allow the telecommunications company to generate electronic tax invoices on behalf of businesses receiving payments through M-Pesa.
A KRA official told the National Assembly’s Finance and National Planning Committee that Safaricom had proposed using reverse invoicing to generate invoices for merchants. The discussions are ongoing, and the proposed system could transmit invoices to KRA at the end of each day, following an approach the authority already uses with supermarkets.
Under the proposed arrangement, Safaricom would generate eTIMS invoices for merchants receiving payments through M-Pesa tills and paybills, then transmit the records to KRA. The system is intended to help businesses that face difficulties generating compliant electronic invoices while providing the authority with more structured records of commercial transactions.
The discussions form part of KRA’s broader efforts to improve tax compliance and gain greater visibility into business activity. The authority has told lawmakers that it intends to use financial information linked to merchant till numbers and Pochi la Biashara accounts to identify income that businesses may not be declaring in their tax returns.
Reverse invoicing could help smaller suppliers that struggle to produce electronic tax invoices, particularly when supplying larger businesses that require compliant records to support expense claims. KRA has pursued similar arrangements in other sectors, including tea and sugar supply chains.
The authority has worked with the East African Tea Trade Association on invoicing small-scale farmers supplying tea to auction. It has also implemented reverse invoicing with sugar factories and planned comparable arrangements for tea and coffee supply chains.
The Safaricom discussions would extend this approach to mobile money payments, connecting merchant tills and paybills with the electronic invoicing system used to document business sales and expenses.
KRA also told lawmakers that domestic VAT collections reached KSh98.2 billion between July and September 2026, falling KSh2.6 billion short of the period’s target. The figures provide context for the authority’s efforts to strengthen compliance and address gaps in tax collection.
The authority has also scrutinised traders suspected of splitting sales across multiple till numbers or paybills to evade tax. Using payment information for compliance purposes would require distinguishing commercial transactions from transfers made for other reasons, since not every payment received through a digital platform represents a business sale.
Safaricom’s merchant network gives the proposed arrangement significant potential reach. The company reported approximately 3.1 million merchants by the financial year ended March 2026, comprising about 2.1 million Pochi la Biashara users and one million Lipa na M-Pesa tills and paybills.
Safaricom also reported that its wider M-Pesa ecosystem processed KSh41.68 trillion in transactions during FY2026. This figure represents total transaction value across the ecosystem, rather than merchant sales alone.
For small businesses, electronic invoicing is relevant to both tax compliance and access to larger customers. Suppliers that cannot provide compliant invoices may face difficulties serving companies that require documented purchases for their own tax records. Reverse invoicing could help address this challenge while giving KRA a clearer record of commercial activity.
The discussions remain ongoing, and the proposed arrangement has not been confirmed as fully implemented. If adopted, it would connect M-Pesa merchant payment channels more directly with Kenya’s electronic tax invoicing system.
