Selling online feels informal. A phone, a catalogue and an M-Pesa number can run a real business. KRA treats it as a business, because the tax law looks at the income, not the channel. If you sell goods or services through Instagram, WhatsApp, TikTok, a marketplace or your own site, these are the taxes and obligations to understand.

1. Register and get a PIN

Every business needs a KRA PIN. If you are a sole seller, you register as an individual and add the tax obligation that fits your income. See how to get a KRA PIN and how to register on iTax. Register a business name if you want a bank account in the business name: starting a business: registration and tax steps.

2. Income tax or turnover tax

Online sellers are taxed on income like any other business:

  • Turnover tax at 3% of gross sales applies to residents with annual turnover between KES 1,000,000 and KES 25,000,000, who choose it. No expenses are deducted. For sellers with low margins on resale, a high rate on sales can exceed a tax on profit, so test both. Use the turnover tax calculator and read turnover tax for small businesses.
  • Income tax on profit applies otherwise. Individuals pay at the personal rates on profit, and companies at the corporate rate. See the sole trader vs company calculator.

3. VAT

If the value of your taxable sales in a year reaches KES 5,000,000, you must register for VAT and charge it at 16% on standard-rated goods and services. Some goods are exempt or zero-rated. Track your sales monthly against the threshold with the VAT registration checker and the VAT threshold monitor. Once registered you can claim input VAT on business purchases, as long as you hold valid invoices: see VAT for small businesses.

4. eTIMS invoices

KRA's electronic tax invoice system, eTIMS, requires businesses to issue and receive invoices through the system. Customers who want to deduct your sale as an expense will ask for one, and you need eTIMS invoices from your suppliers to deduct your costs. Read eTIMS and e-invoicing explained and eTIMS and your expenses. The eTIMS mobile and web tools are free and designed for small sellers.

5. Imports for resale

If you import goods to sell, you pay import duty, VAT and other charges at the border before you can sell: see importing goods for resale: VAT and records and the landed cost calculator. Keep the import entry, because it is the evidence for your input VAT.

6. Digital marketplaces and payments

Selling through a marketplace or app does not remove your obligations. The platform may report your sales or deduct fees, and you remain responsible for declaring the income. Some payments to platforms or from non-resident customers may be subject to withholding tax or other rules, so keep payment statements. Overseas digital businesses selling to Kenyans face a separate regime, explained in digital service tax replaced by significant economic presence tax.

7. Records for informal sales

Record every order with the date, customer, items, amount and payment method, even when it begins in a WhatsApp chat. Save the chat, the M-Pesa message and the delivery proof. Use the monthly sales tracker with targets and keep the M-Pesa statements: keeping records with M-Pesa business. Separate your business M-Pesa from your personal one: separating business and personal money.

8. Payment of tax

Pay turnover tax monthly by the 20th, file a return and make instalment payments if on income tax. Missing dates leads to penalties: see KRA penalties and interest explained.

A starter checklist

  1. PIN and registered obligations
  2. Business M-Pesa or bank account
  3. eTIMS set up
  4. Sales record and expense receipts
  5. Monthly check against the VAT threshold
  6. Returns on time

Frequently asked questions

Do I pay tax if I sell only on WhatsApp? Yes. Tax applies to income from any business, whatever the channel.

Can KRA see my M-Pesa and social media sales? KRA can request statements from banks and mobile money providers and has access to data from eTIMS and other sources. Keep your records straight.

Is delivery charged to the customer taxable? Yes. It forms part of the sale value for income tax and, if you are VAT-registered, for VAT.

Do I need a company to sell online? No, but a company may help with credibility and limited liability. Compare the tax first.