Remote work has opened international jobs to Kenyans, and many are paid in dollars or pounds by companies with no presence in Kenya. Because no Kenyan employer deducts PAYE, the worker is responsible for declaring and paying the tax. Many do not realise this until KRA contacts them. This guide explains the rules in simple terms.

Is the income taxable in Kenya?

Yes, for a Kenyan resident. The Income Tax Act deems a payment to a resident person for employment or services rendered in Kenya or outside Kenya to have accrued in or been derived from Kenya. In short, if you live in Kenya and do the work from Kenya, the pay is Kenyan-source income, whoever the employer is and wherever the money is paid. A person is resident for tax if they have a permanent home in Kenya and were present in the country during the year, or were present for 183 days or more in the year. Keep passports and travel records to prove your days.

Employee or contractor?

How you are engaged affects how you file:

  • Employee of the foreign company. The income is employment income. No Kenyan PAYE is deducted, so you pay the tax yourself and file a return. Personal relief is available on the return.
  • Independent contractor or freelancer. The income is business or professional income. You may deduct genuine business expenses, and you should read tax for freelancers and content creators. Turnover tax may be an option when turnover is between the limits, though professional services are excluded from turnover tax.

Your contract and the level of control decide which applies. If you work set hours under the company's direction, you are probably an employee.

Register and file

  1. Get a KRA PIN if you do not have one: how to get a KRA PIN.
  2. Register for the relevant income tax obligation on iTax. See how to register on iTax.
  3. File an annual return by 30 June after the end of the year: the 30 June tax deadline.
  4. Convert foreign currency to shillings. Use the Central Bank of Kenya rate on the date you were paid, or an average method applied consistently, and keep the statements.

Instalment tax

Because there is no PAYE, tax that exceeds a set threshold is payable in instalments during the year, due on the 20th of the fourth, sixth, ninth and twelfth months of the year of income. Missing instalments leads to penalties and interest. Use the instalment tax calculator to estimate each payment and the instalment tax planner to track them. The reasoning is covered in KRA penalties and interest explained.

Social contributions

An employee of a foreign company still has to think about NSSF and SHIF. Self-employed people may register and contribute voluntarily to NSSF, and SHIF applies to residents on income. Check NSSF contributions explained and SHIF contributions explained. The housing levy may apply to employees of a Kenyan entity, so the position for foreign employees should be confirmed.

Avoiding double tax

If the foreign country also taxes your pay, Kenya may give a credit under a double taxation agreement, but only where an agreement exists and you can show the tax paid abroad. Many remote jobs have no foreign tax withheld at all. Keep tax certificates from the employer and ask for your pay slips in writing.

Practical money tips

  • Receive money through a bank account or a licensed provider so the records are clear.
  • Set aside tax from every payment, for example in a separate savings pot. The savings and sinking fund tracker helps.
  • Save contracts, invoices and payment confirmations for five years.
  • Use the sole trader vs company calculator if you earn enough to consider forming a company.

Common mistakes

Waiting until KRA sends a letter, mixing personal and business money, ignoring instalments, and using inconsistent exchange rates. Fixing them early is far cheaper than a later audit, which is explained in what to expect in a KRA audit.

Frequently asked questions

Does money sent through PayPal or Wise change the tax? No. The tax depends on the nature of the income and where you live and work, not on the payment channel. Keep statements to prove the amounts.

When should I register on iTax? As soon as you start earning, so that your return and instalments are filed on time and penalties are avoided.

Can I deduct expenses such as internet and a laptop? Contractors may deduct expenses incurred wholly for the business. Employees generally cannot deduct such costs from employment income.

Do I need a company? Not necessarily. Compare the tax on both routes with the sole trader vs company calculator before you decide.