Bars, Hotels and Clubs: eTIMS, Excise Stamps and the Levies That Catch Owners Out

A bar or hotel handles more small transactions in one night than many businesses do in a month. Cash, Mpesa, cards and Pesapal all land at once while stock moves by the tot and the plate. Meanwhile KRA sees every eTIMS invoice your customers and suppliers transmit. That makes hospitality one of the easiest sectors for KRA to test against its own data. Here is what owners of bars, hotels, restaurants and members clubs need to get right.

Excise duty: you do not file it, but it can still catch you

Excise duty on beer, wine and spirits is paid by the manufacturer or importer, not by the bar that sells the drink. Where a bar is exposed is the excise stamp. KRA's position is clear: it is an offence to offer for sale, or even to hold, excisable goods that carry no stamp or a counterfeit one. The consequences can include seizure of stock, closure of the premises and prosecution.

• Buy only from licensed distributors and keep their eTIMS invoices on file.
• Check stamps with KRA's stamp verification app whenever you take on a new supplier or a consignment arrives unusually cheap.
• Never accept loose stock from another outlet or an unnamed supplier, however good the price.

Excise also reaches your costs indirectly. The Finance Act 2026 raised excise on imported sugar and on sweetened juices and flavoured drinks, which feeds into cocktails, mixers and fresh juice. Our Finance Act 2026 guide has the new rates; check supplier quotes before you reprint the menu.

eTIMS: the invoice now decides who can deduct

Since January 2024, a business expense that is not supported by a valid eTIMS invoice cannot be deducted for income tax. In hospitality that rule cuts both ways.

• On sales. A company booking a conference, a staff party or a corporate table needs an eTIMS invoice showing its name and KRA PIN. An invoice issued to "cash customer" is useless to them, so they will ask for it to be redone or delay payment. Capture the PIN at booking, not at checkout.
• On purchases. Every crate, carcass, sack of charcoal and gas refill should come with an eTIMS invoice. Meat bought for the butchery from a trader who cannot issue one is money you spent but cannot deduct.
• On transmission. An invoice generated by the POS but stuck in an offline queue does not exist as far as KRA is concerned. Since 1 July 2026 failures attract a penalty of the higher of 5% of the tax due or KES 100,000 for a company, as explained in our eTIMS penalty guide.

The 2% tourism levy

Hotels, restaurants, bars and other businesses regulated under the Tourism Act 2011 pay a levy of 2% of gross sales to the Tourism Fund. It is due by the 10th of the following month. Late payment brings an immediate KES 5,000 penalty plus 3% of the levy for every month it stays unpaid. Because it is worked out on gross sales, your levy return should always tie back to the same sales figure as your VAT return. If the two do not match, one of them is wrong.

VAT: 16% once you cross KES 5 million

Food, drink and accommodation are charged VAT at 16%. Registration becomes compulsory once taxable sales reach KES 5 million in any 12 months, which is under KES 14,000 a day. A busy bar reaches that quickly. Set menu prices VAT inclusive so that crossing the threshold does not quietly take 16% out of your margin. Our VAT registration guide covers the steps.

Reconciliation: where the money actually leaks

Most tax problems in hospitality start life as reconciliation problems. A short daily routine that ties four sources together solves both.

Watch the fee line in particular. Payment processing fees now carry 16% VAT, so the cost of every card and aggregator payment rose on 1 July 2026.

Stock needs the same discipline. For the bar, count opening and closing stock by bottle and convert to tots so that any shortfall shows in shillings. For the kitchen or butchery, compare kilos bought with plates sold, allowing a realistic yield for bone and trimming. A variance of more than a few percent that repeats week after week is rarely spillage.

Members clubs

Clubs carry extra layers: subscriptions, members' accounts run on credit and a busy events calendar. Keep subscription income separate from bar and food sales. Invoice account charges through eTIMS at the point of sale rather than when the member settles. Age member balances every month so old debts are chased before they go stale.

Six actions for this month

1. Check excise stamps on current stock and on your last three supplier deliveries.
2. Add a buyer PIN field to your booking and POS process for corporate customers.
3. Confirm eTIMS invoices are transmitting, not queuing.
4. Reconcile one full week of POS, Mpesa, card and cash takings to the bank.
5. Check that your tourism levy returns tie to your VAT sales.
6. Run a full bar and kitchen stock count and put a shilling value on the variance.