The Kenya Revenue Authority (KRA) and Safaricom are holding preliminary talks on a plan that would let M-Pesa generate electronic tax invoices for small and micro traders.
Under the proposal, Safaricom would create receipts through the electronic tax invoice management system (eTIMS) for merchants receiving payments via M-Pesa tills and paybills, then forward the invoices to KRA for tax-authority visibility.
A KRA official told the National Assembly Committee on Finance and National Planning that the arrangement would allow Safaricom to transmit invoices at the end of each day, a method that has already been successful with supermarkets.
The reverse-invoicing model is intended to help large firms comply with the law that requires all suppliers, regardless of size, to issue electronic invoices, and to give the tax authority a clearer view of transactions involving small traders who are currently outside the tax bracket.
Safaricom disclosed that its M-Pesa ecosystem includes 3.1 million merchants for the year to March 2026, a 71.4 per cent increase from the previous 1.8 million, comprising 2.1 million traders using the Pochi la Biashara wallet and one million using Lipa na M-Pesa.
KRA officials said the move could curb tax evasion and boost revenue by billions of shillings, adding that similar reverse-invoicing collaborations are being pursued with the tea, sugar and coffee sectors.
The tax authority also noted a prior agreement with the East African Tea Trade Association to raise invoices on behalf of small-scale tea farmers, and indicated that reverse invoicing is already being implemented with sugar factories.
Earlier in October 2024, a senior economic adviser to President William Ruto announced that mobile-money paybill and till accounts would be converted into electronic tax registers to address the gap between the estimated 200,000 firms with electronic tax registers and the two million businesses using paybills.
KRA has previously warned that some small traders switch M-Pesa till or paybill numbers to avoid detection, prompting a crackdown on such practices.
