A colleague recently received a WhatsApp message from a sender named “SHURU.” Expecting something personal, he opened it—only to find a tax demand from the Kenya Revenue Authority (KRA), complete with calculated income, expenses, and net tax payable.
This raises immediate concerns:
• Is WhatsApp now an official KRA communication channel?
• How was such detailed financial data accessed and processed?
• Does this meet the standards of the Data Protection Act?
These are legitimate governance questions. But they are not the core issue.
The real issue is this: Kenya’s tax systems—particularly eTIMS—are fundamentally misaligned with the realities of medical practice.
The Structural Mismatch: Medicine Is Not Retail
eTIMS was designed for transactional businesses—retail shops, supermarkets, cafés—where:
• Payment is immediate
• Costs are visible and receipted
• Margins are predictable
Medical practice does not operate this way.
1. Taxation on Unpaid Income
Up to 40% of medical claims remain unpaid, largely due to:
• Legacy NHIF debts
• Delayed or rejected SHA reimbursements
Requiring doctors to generate eTIMS invoices at the point of service effectively means:
Doctors are taxed on income they have not received—and may never receive.
2. Patient Confidentiality Risks
Initial eTIMS requirements demanded granular transaction details, risking exposure of:
• Patient identity
• Clinical services rendered
While later amendments reduced this burden, the principle remains compromised:
Tax compliance must not override medical confidentiality.
3. Administrative and Cost Burden
Doctors have been forced into roles as:
• Tax data entry clerks
• IT system operators
This introduces:
• Additional staffing costs
• Software and infrastructure expenses
• Reduced clinical productivity
4. Distortion of the Informal Economy
The unintended consequence of eTIMS compliance:
Doctors have shifted away from informal providers (laundry, food vendors, small repairs) who cannot generate eTIMS receipts.
Result:
• Loss of income for small businesses
• Reduced circulation of money in the informal sector
• No meaningful gain in tax efficiency
The Expense Recognition Gap
KRA’s current approach systematically underestimates legitimate medical expenses, particularly where eTIMS documentation is absent.
Key Unrecognized or Under-recognized Expenses
Licensing & Regulation
• KMPDC licenses (non-eTIMS)
• Multiple professional certifications
Continuous Medical Education (CME)
• KMA, KOGS conferences
• Mandatory CPD activities
Practice Operations
• Staff salaries
• Rent and utilities
• Medical consumables
Digital Infrastructure
• Internet
• Cloud storage
• Clinical software
Mobility
• Vehicle purchase, fuel, maintenance
Capital Equipment
• Ultrasound machines
• Endoscopy/laparoscopy equipment
Professional Survival Costs
• Food during long clinical hours
• On-call sustenance
A large portion of a doctor’s true cost base is invisible to eTIMS—and therefore ignored in tax computation.
Compounding Burdens on the Formal Sector
Doctors sit squarely within Kenya’s ~17% formal workforce, already carrying:
• PAYE / income tax (35%)
• Withholding tax (5%)
• SHA contributions (2.75%)
• Housing levy (1.5%)
Other Black Tax
At the same time:
• Informal sector taxation remains minimal
• Healthcare providers face delayed payments
The system is effectively extracting maximum revenue from the most compliant—and most visible—group.
Policy Recommendations
To restore fairness, compliance, and sustainability, the following reforms are necessary:
1. Shift to Cash-Based Taxation for Medical Practice
• Tax should only apply upon receipt of payment, not invoicing
• Aligns taxation with actual cash flow realities
• Prevents punitive taxation on unpaid claims
2. Introduce a Presumptive/Standard Deduction Model
• Allow doctors a fixed expense ratio (e.g., 50–60%), OR
• Introduce a simplified presumptive tax regime (e.g., 10–15%)
This would:
• Reduce disputes with KRA
• Eliminate excessive documentation burden
• Improve voluntary compliance
3. Recognize Non-eTIMS Professional Expenses
KRA should formally whitelist:
• Licensing fees
• CPD and conference costs
• Professional subscriptions
Even without eTIMS documentation.
4. Protect Patient Confidentiality by Law
• Explicit legal safeguards within tax systems
• Zero requirement for identifiable clinical data in tax invoices
5. De-link eTIMS from Service Provision
• eTIMS invoicing should occur only at point of payment, not at service delivery
• Particularly for insurance and SHA-based care
6. Broaden the Tax Base Through Consumption Tax
• Shift focus from income taxation of the formal sector
• Expand VAT/consumption-based systems to capture informal activity
7. Formal Engagement Framework with Professional Bodies
• Institutionalize KRA–KMA technical working groups
• Co-design sector-specific tax frameworks
Conclusion
Doctors are not resisting taxation.
They are resisting unfair, impractical, and misaligned taxation systems.
They are:
• Overtaxed
• Underpaid
• Delayed in reimbursement
• Burdened with administrative compliance
The result is predictable:
• Reduced investment in healthcare
• Strained service delivery
• Fewer jobs created
A fair tax system should enable productivity—not punish it.
Until then, doctors must:
• Engage competent tax advisors
• Maintain comprehensive records (eTIMS or otherwise)
• Assert their right to fair taxation
And government must answer a simple question:
Do we want doctors treating patients—or managing tax systems?
Dr. Simon Kigondu
Gynaecologist
Immediate Past President, Kenya Medical Association