KRA Plans to Use M-Pesa Records to Identify Businesses Underreporting Income

The Kenya Revenue Authority (KRA) plans to use M-Pesa Till Numbers and Pochi La Biashara transaction records to identify businesses that may be declaring less income than they actually receive.

For example, a business that receives KES 1 million through M-Pesa but declares only KES 300,000 in sales could be flagged over the KES 700,000 discrepancy. KRA would then seek to establish whether the difference represents undeclared income.

The proposed checks would also target traders who receive payments but fail to file tax returns.

The plan builds on KRA's existing efforts to use digital records to detect tax discrepancies. Since January 2026, the authority has been validating income and expenses declared in tax returns against eTIMS invoices, withholding tax records and customs data. In April, KRA also reported encountering traders who frequently changed their M-Pesa Till Numbers and Paybills to avoid leaving consistent transaction trails.

Safaricom reported 3.1 million M-Pesa merchants in the financial year ended March 2026, including 2.1 million using Pochi La Biashara and approximately one million using Lipa na M-Pesa Till Numbers and Paybills.

KRA Also Wants M-Pesa to Generate Tax Invoices

Alongside the proposed transaction checks, KRA has entered preliminary discussions with Safaricom to allow M-Pesa to generate electronic tax invoices for small businesses.

According to Business Daily, the arrangement would allow Safaricom to generate eTIMS invoices on behalf of traders receiving payments through Till Numbers and Paybills, then transmit those invoices to KRA.

For small businesses, this could make it easier to supply larger companies and government institutions, where electronic tax invoices are important for documenting purchases and supporting payments. KRA already provides a mechanism for buyers to generate invoices on behalf of small suppliers with annual turnover not exceeding KES 5 million.

KRA has not disclosed when the proposed transaction checks will begin or how it intends to access and reconcile the payment records. Its discussions with Safaricom on electronic invoicing also remain preliminary.

An M-Pesa payment does not necessarily represent taxable business income. Some transactions may involve refunds, loans or transfers unrelated to sales, meaning discrepancies would still need to be investigated.

But if KRA follows through with the plan, businesses could find themselves having to explain why the amounts recorded through their M-Pesa accounts differ from the sales declared in their tax returns.