Money earned from Upwork, YouTube, TikTok, Fiverr or direct clients is taxable income in Kenya, whether it is paid in shillings or dollars and whether it arrives by bank, PayPal or M-Pesa. Many freelancers only discover this when a client asks for a PIN or a tax compliance certificate. The good news is that the rules are simple once you choose a route.

Step 1: register with KRA

You need a KRA PIN. If you do not have one, read how to get a KRA PIN, then add the right tax obligation on iTax; see how to register on iTax. Self-employed people file an annual return by 30 June for the previous calendar year, as explained in the 30 June tax deadline.

Step 2: choose how you are taxed

There are two main routes for freelance income:

Normal income tax. You add up your income for the year, subtract allowable expenses such as internet, a share of rent, software, equipment wear and tear and platform fees, and pay tax on the profit at the individual rates of 10% to 35%, less personal relief. This is cheaper when your expenses are high.

Turnover tax. If your annual income is between KES 1 million and KES 25 million, and the work is not a professional or management service, you may pay 3% of gross income each month. No expenses are deducted. Read the details in turnover tax for small businesses.

Compare the two with the freelancer and digital creator tax calculator, which shows both results side by side for your own numbers.

An example

A designer earns KES 1,200,000 in a year and has KES 200,000 of expenses. Turnover tax would be 3% of 1,200,000, which is KES 36,000. Normal income tax on a profit of KES 1,000,000 comes to about KES 208,600 after personal relief, so turnover tax is much cheaper here. With high expenses the answer can flip, which is why the calculator shows both.

What to record

  • Every payment received, with the date, platform and the amount before fees
  • The exchange rate used for dollar income, with the source of the rate
  • Platform fees and withdrawal charges
  • Receipts for equipment and expenses

A simple monthly log is enough. The free simple cashbook records money in and out, the tax records checklist and document log shows what to keep, and the free invoice with VAT template gives clients a proper invoice.

Platform payments and withholding

Some platforms and Kenyan clients withhold tax from payments. Management and professional fees can attract withholding of 5% when paid by a Kenyan business; see withholding tax in Kenya explained. Claim the credit when you file.

VAT

If your services are sold in Kenya and your sales pass KES 5 million in 12 months, you must register for VAT. Services supplied to clients outside Kenya may be zero-rated. Check your own position with the VAT registration checker.

Filing

Filing a return is how you show the platforms and banks that you are compliant. Your tax compliance certificate may be needed for contracts and tenders; see getting a tax compliance certificate.

Tips

  1. Set aside a percentage of every payment for tax, so the bill does not surprise you.
  2. Keep business and personal money in separate accounts.
  3. Review your route every year as your income changes.

Tax treatment depends on your facts. Confirm the details with KRA or a registered tax agent.