The short answer
Records exist to answer questions later, so the test that matters is not whether you kept something but whether a specific transaction from eight months ago can be found in a few minutes. For construction businesses specifically, that plays out against how the trade already sells and to whom.
Records and audit for construction businesses
Materials bought per project and consumed on site, where site wastage and pilferage are significant and cost overruns are discovered only after they have happened. That is the background against which records and audit has to work in this trade.
What invoicing actually looks like here
Invoice trade tied to certified progress, retention and often withholding tax. Material purchases must carry compliant invoices too, because the deductibility of project costs depends on it.
What the rules say
This page explains how a requirement generally works. It is not tax advice, and it cannot account for the specifics of any one business. For a position you intend to rely on, confirm with KRA directly or with a registered tax agent.
Tax rules in Kenya change with each Finance Act and with regulations made during the year. Before acting on any figure, deadline or threshold, check the current position on KRA's own website.
What we are not stating here. Some of the specific requirements relating to this topic have not yet been verified against their primary source by our reviewer, so they are withheld from this page rather than stated from memory. That means you will not find a threshold, rate, deadline or penalty figure below. For those, check KRA directly. Everything else on this page explains how the mechanism works and is not affected.
What records are actually for
Records exist to answer questions later, under conditions where memory is not available and the person who knew has left. That framing decides what to keep. If a document would answer "what did we sell, to whom, for how much, and what did it cost us", keep it somewhere retrievable.
Retrievable is the operative word
A box of receipts in the back room technically satisfies keeping records and satisfies nothing else. The test to apply is whether a specific transaction from eight months ago can be found in a few minutes. If not, the records exist but do not work.
Where this goes wrong
- Material wastage and site pilferage
- Progress billing disputed by clients
- Retention held for months after completion
Common questions
Does a construction business need to issue a tax invoice for every sale?
Invoice trade tied to certified progress, retention and often withholding tax. Material purchases must carry compliant invoices too, because the deductibility of project costs depends on it.
What usually goes wrong with records in a construction business?
The recurring problems in this trade are material wastage and site pilferage; progress billing disputed by clients; retention held for months after completion; subcontractor payments against certified work. Each of them shows up in the records before it shows up in the bank balance.
How should a construction business keep stock records?
Materials bought per project and consumed on site, where site wastage and pilferage are significant and cost overruns are discovered only after they have happened. Records that do not reflect that pattern will not tell you anything useful, whatever system produces them.
How do I know this information is current?
Tax rules in Kenya change with each Finance Act and with regulations made during the year. Before acting on any figure, deadline or threshold, check the current position on KRA's own website.
Sources
- officialKenya Revenue Authority — Kenya Revenue Authority, checked 2026-09-18
- officialTax Procedures Act, 2015 (Act No. 29 of 2015) — National Council for Law Reporting (Kenya Law), checked 2026-09-18
- officialIncome Tax Act (Cap. 470) — National Council for Law Reporting (Kenya Law), checked 2026-09-18
- officialeTIMS (Electronic Tax Invoice Management System) — Kenya Revenue Authority, checked 2026-09-18
- officialFinance Act, 2023 (Act No. 4 of 2023) — National Council for Law Reporting (Kenya Law), checked 2026-09-18
- officialTax Procedures (Electronic Tax Invoice) Regulations, 2024 — Kenya Gazette / Kenya Law, checked 2026-09-18
- officialValue Added Tax Act, 2013 (Act No. 35 of 2013) — National Council for Law Reporting (Kenya Law), checked 2026-09-18