ELECTRONIC TAX INVOICE MANAGEMENT SYSTEM (eTIMS) ADOPTION AND PERFORMANCE OF MICRO AND SMALL ENTERPRISES IN KENYA

Abstract

The Government of Kenya has recently accelerated digital transformation in taxation through the rollout of the Electronic Tax Invoice Management System (eTIMS), a platform designed to enhance compliance, transparency, and efficiency in tax administration. Despite its perceived benefits, many Micro and Small Enterprises (MSEs) struggle to adapt to this system, citing infrastructural, financial, and technological constraints. This study examines the influence of eTIMS adoption on MSE performance in Kenya, focusing on operational efficiency, access to credit, and sales growth. Anchored on the Technology Acceptance Model (TAM), Compliance Cost Theory, and the Resource-Based View (RBV), the study utilizes a descriptive research design supported by secondary data from the Kenya Revenue Authority (KRA), the Central Bank of Kenya (CBK), and the Kenya National Bureau of Statistics (KNBS). Findings reveal that eTIMS adoption has improved transparency and formalization but has simultaneously introduced significant compliance and digital literacy burdens among small traders. The study concludes that eTIMS can act as both a compliance catalyst and a business enabler if its implementation is supported by continuous digital capacity development and policy incentives that reward compliant enterprises.

Key Words: Electronic Tax Invoice Management System (eTIMS); Micro and Small Enterprises (MSEs); Digital Tax Compliance; Operational Efficiency; Access to Finance; Sales Growth; Digital Literacy; Kenya