Most conversations about eTIMS focus on systems, invoices, and compliance. What is discussed far less is how eTIMS is changing relationships between businesses and their suppliers, often in subtle but very real ways.
For many Kenyan businesses, suppliers are not just vendors. They are long term partners, friends, relatives, or small traders who have been supplying goods or services for years based on trust. eTIMS introduces a new requirement into these relationships, and that requirement is documentation.
This shift is forcing businesses to make uncomfortable decisions that go beyond tax and into how they operate day to day.
Why Supplier Relationships Matter More Under eTIMS
Before eTIMS, a business could record an expense as long as there was some form of proof. A receipt, a delivery note, or even a simple acknowledgment was often enough to support an expense during filing. Audits happened later and explanations could be given.
Under the new validation system, the focus is no longer on explanations. It is on data.
If a supplier does not issue an electronic invoice that is transmitted to KRA and linked to the buyer’s PIN, the system may not recognise that expense at all. This changes the balance of responsibility. Businesses can no longer say the supplier failed to issue proper documentation and expect that explanation to be accepted later.
The tax risk now sits squarely with the buyer.
The Reality for Businesses That Use Informal Suppliers
Many Kenyan businesses rely on informal suppliers because they are affordable, reliable, and flexible. These suppliers may include farmers, transporters, technicians, artisans, and small traders who do not operate structured systems.
For years this worked because the tax system allowed some flexibility. That flexibility is shrinking.
When expenses from informal suppliers are disallowed, the business does not just lose a deduction. It pays more tax on profit that does not reflect economic reality. Over time, this can significantly affect cash flow and pricing decisions.
Businesses are now being forced to ask difficult questions. Do they continue working with trusted suppliers and accept higher tax costs, or do they insist on compliance even if it strains relationships.
Conversations Businesses Are Now Forced to Have
eTIMS has introduced conversations that many business owners are uncomfortable having.
Businesses are now asking suppliers whether they are registered for eTIMS, whether they can issue electronic invoices, and whether they can capture buyer PINs correctly. For some suppliers, these questions feel intrusive or unnecessary. For others, they highlight gaps in knowledge and resources.
Some suppliers are willing to comply but need guidance. Others resist because they fear increased tax exposure themselves. Some simply walk away.
These conversations are not about distrust. They are about survival in a system that is becoming increasingly data driven.
How This Is Reshaping Procurement Decisions
Procurement decisions are no longer based only on price and reliability. Compliance is now part of the equation.
Businesses are beginning to prioritise suppliers who can issue compliant invoices even if they are slightly more expensive. This is because the tax cost of disallowed expenses often exceeds the savings from cheaper suppliers.
Over time, this is likely to formalise parts of the supply chain. Suppliers who adapt will gain more business. Those who do not may find themselves excluded from certain clients.
This is not happening because businesses want it. It is happening because the system demands it.
The Emotional Side of Compliance Changes
For many small and medium business owners, this transition is emotionally challenging. Long standing relationships are being tested. Business owners feel caught between loyalty and compliance.
There is also frustration. Businesses that have always tried to operate honestly may feel punished because they cannot control whether a supplier issues an electronic invoice correctly.
Acknowledging this emotional reality is important. eTIMS is not just a technical system. It changes how people interact and make decisions.
How Businesses Can Navigate This Transition Thoughtfully
Some businesses are choosing a gradual approach. They explain the changes to suppliers, help them understand eTIMS, and give them time to adapt. In some cases, businesses assist suppliers to register or recommend service providers who can help.
Others restructure procurement by splitting suppliers into compliant and non compliant categories and adjusting pricing or contract terms accordingly.
Clear communication helps. When suppliers understand that the issue is not preference but regulatory necessity, resistance often reduces.
The Long Term Impact on the Kenyan Business Environment
In the long run, eTIMS is likely to push more suppliers into the formal economy. This may improve transparency and fairness, but it also increases pressure on small traders who lack resources.
Businesses that adapt early will have stronger supplier networks and fewer compliance shocks. Those that ignore the issue may face repeated tax adjustments and strained relationships.
The shift is uncomfortable, but it is already happening.
What This Means for Business Owners
Business owners now have to think beyond their own systems. Compliance extends into the supply chain.
Understanding this early allows businesses to plan, communicate, and adjust gradually rather than reacting under pressure during filing season.
The question is no longer whether eTIMS affects supplier relationships. It already does. The real question is how thoughtfully businesses choose to manage that change.
Final Reflection
eTIMS is often described as a tax system upgrade. In reality, it is a behavioural change. It reshapes how businesses choose suppliers, how they negotiate, and how they define acceptable risk.
Businesses that recognise this human side of compliance will navigate the transition more smoothly than those who treat it as a purely technical issue.