The Kenya Revenue Authority (KRA) is looking to utilise M-Pesa business transaction records to help detect potential unaccounted income.

The idea was presented to the National Assembly Departmental Committee on Finance and National Planning in a meeting where KRA outlined its plan to use financial data from Lipa na M-Pesa Till Numbers, Paybills and Pochi la Biashara accounts.

KRA is also in early talks with Safaricom to allow the company to generate electronic invoices on behalf of merchants and send them to KRA via the electronic Tax Invoice Management System (eTIMS).

This would allow KRA to compare business sales figures with electronic transaction data.

“We want Safaricom to be involved in reverse invoicing. We have started talking to them,” the KRA official told the committee, as reported by The Star.

He added that it could allow Safaricom to send invoices on behalf of the merchants at the end of each business day, similar to how it has been done with supermarkets. However, there is no set date to implement the system.

The system would allow KRA to use another method to determine if there is a mismatch between business activity and declared income. If there was a large difference between sales and the transaction records, KRA could investigate further to see if there were issues with the business not declaring the correct amount of income.

However, not all mobile money transactions will be taxable business sales. There could be transfers, refunds and other non-business related payments recorded within the accounts.

The idea comes as KRA looks to boost domestic revenue after coming up short on VAT and PAYE collections in the July to September 2026 quarter. Figures show that VAT collections came in at around KSh98.2 billion compared to the target of KSh100.8 billion, meaning KRA came up KSh2.6 billion short. PAYE came in at around KSh154.9 billion against a target of KSh162.2 billion meaning KRA had a deficit of around KSh7.3 billion.

VAT is charged on taxable goods and services whereas PAYE is deducted by employers from employee’s taxable employment income. Whilst this has put pressure on KRA to collect more revenue, it does not necessarily mean that the deficits were due to tax evasion.

Safaricom has a large M-Pesa network which could help boost electronic invoicing.

In the year ended March 2026, the company stated that there were around 3.1 million merchants within its M-Pesa ecosystem. Of these, around 2.1 million were using Pochi la Biashara and one million were using Lipa na M-Pesa Till Numbers and Paybills. These services are widely used by traders and service providers to receive payments.

If this idea is implemented, Safaricom will be able to generate electronic invoices for qualifying transactions and send them to KRA via eTIMS. This would ease the burden on small traders who struggle to create invoices and give KRA more data to verify declared sales.

This would utilise reverse invoicing. Some micro and small enterprises struggle to create electronic invoices. By automating the process, qualifying merchants would find it easier to comply and businesses would be able to keep records of their transactions with larger companies.

However, there are still some key questions to answer. What would qualify as a transaction that would be automatically invoiced? How would merchants correct any incorrect data? And what would be the process for managing and sharing transaction data?

There would need to be consideration for non-business income and a clear process for merchants to check their invoices. KRA has not yet announced that they have come to an agreement with Safaricom and there is no set date for implementation. This would act as a compliance system.

If implemented, this would help small businesses comply with electronic invoicing and would help KRA identify any inconsistencies in tax declarations. How accurate the transactions are categorised, how the system is managed and how well informed the merchants are will determine how effective the system is.