People often assume that tax follows citizenship. In most countries, and in Kenya, it follows residence. Whether you are a tax resident changes the rates that apply to some income, which income is taxable in Kenya and whether you qualify for personal relief. If you have moved, returned home or work for a foreign company, it is worth understanding. This guide is a general overview; the exact tests are in the law, so confirm your own position with KRA or an adviser.

Why residency matters

A resident is generally taxed on income that arises in or is derived from Kenya, and in some cases on income from abroad, subject to the rules. A non-resident is generally taxed only on Kenyan-source income, often through withholding, at different rates. Residents qualify for personal relief and other deductions that non-residents may not. Dividends, interest and fees paid to non-residents are usually subject to higher withholding rates; the dividend and interest tax calculator and the withholding tax calculator show the difference.

The general tests

Broadly, an individual may be treated as resident if they have a permanent home in Kenya and were present in the country at any time during the year, or if they were present for 183 days or more in the year, or for a period averaging a set number of days over several years. The wording and the conditions matter, so read the current provision or ask for guidance. A company is treated as resident if it is incorporated in Kenya, or its management and control is exercised here, or it is declared resident by the Cabinet Secretary.

When your status changes

Residency is decided year by year, so you can be resident in one year and not the next. The years in which you arrive or leave are the tricky ones, because you may be resident for part of the year only in practice. Keep a record of the dates you enter and leave the country, such as passport stamps and flight tickets. That record is your evidence if your status is questioned.

Returning home

People coming back to Kenya after living abroad should think about both tax and customs. Your residency start date affects when your worldwide or local income becomes taxable, and personal effects may qualify for relief at the border; see returning resident duty-free allowance explained. If you also bring a vehicle, read how much it costs to import a car to Kenya.

Working remotely for a foreign employer

A Kenyan resident employed by a foreign company, working from Kenya, has to think about where the work is done, who pays and whether PAYE is deducted. In many cases the income is taxable in Kenya and must be declared even if the employer pays abroad. Tax for Kenyans working remotely for foreign employers covers this in detail, and the PAYE calculator shows what the tax looks like on a given salary.

Foreign income and tax treaties

If you earn income abroad and are also taxed there, a double tax treaty between Kenya and the other country may prevent you being taxed twice or may reduce withholding. Treaties set tie-breaker rules for people who are resident in both countries. Keep foreign tax certificates, because you may need them to claim credit. Ask KRA or an adviser for the treaty in question.

Non-residents earning in Kenya

Non-residents with Kenyan income, for example rent, dividends or consultancy fees, usually suffer withholding tax at source, and for some income that is the final tax. Landlords abroad should read rental income for individuals and companies and check the withholding rules. Payers in Kenya must withhold correctly; see withholding tax in Kenya explained.

What to do if you are unsure

Write down your history: where you lived, where you worked, how many days in Kenya each year, where your home and family are. Then read the current test and apply it to the facts. If the answer is not clear, ask KRA in writing, or take advice from a qualified adviser, before you file. A wrong residency status can mean the wrong rates and a penalty.

Keep records

Keep a log of travel dates, a copy of your tenancy or ownership documents, employment contracts and tax certificates from each country. The tax records checklist and document log gives you a ready list. Residency is easy to prove with good records and hard to prove without them.