Tax for Freelancers and Online Sellers in Kenya

Money you earn from freelancing, content or selling online is taxable business income, the same as any other business. You declare it and file an annual return by 30 April. Clients and platforms may deduct 5 percent before paying you, which counts towards your tax. Turnover tax may fit if you sell goods, but many freelancers do not qualify.

Start with the basics

Get a KRA PIN and check your iTax obligations. Income does not fall outside the rules because it comes through an app or a foreign platform. Section 10(4) of the Income Tax Act treats payments made or facilitated by a digital marketplace or platform owner, resident or not, as income from Kenya. That covers digital content monetisation, property and services.

Which income tax applies

Turnover tax (section 12C). This is 1.5 percent of gross receipts, for residents with business turnover above KES 1 million and not above KES 25 million a year. You file and pay by the 20th of each month. You cannot deduct costs, as the tax is on receipts. You can elect out in writing.

It does not apply to:

• rental income
• management, professional or training fees
• income subject to a final withholding tax

The second exclusion catches many freelancers. The Act defines those fees as payment for “managerial, technical, agency, contractual, professional or consultancy services”. A web developer or a consultant is unlikely to fit turnover tax. A person selling goods online is much more likely to. If your work sits in between, such as content creation, confirm with KRA before you register.

Ordinary income tax. If turnover tax does not apply, you pay tax on profit, at the individual PAYE bands, after expenses wholly and exclusively for the business. Keep eTIMS invoices for those costs, since section 16(1)(c) can disallow expenses without them. Our comparison of the two regimes can help you decide.

The 5 percent deductions

Three kinds of deduction under section 35 and the Third Schedule matter here. All are for residents. Non-residents face 20 percent.

• Digital content monetisation: 5 percent. The Act covers ads, sponsorships, affiliate commissions, subscriptions, memberships, licensing content and crowdfunding commissions.
• Payments on a digital marketplace: 5 percent. This is on income deemed earned from a digital marketplace.
• Professional fees: 5 percent. Local clients deduct this where fees reach KES 24,000 in a month.

Platforms are now applying the content rule. Check with each platform when it starts deducting, because payments may be held until a creator supplies a verified PIN.

These deductions are not final tax under the Act. Section 39 sets tax deducted under section 35 off against the tax charged for that year. So download your monthly statements and certificates, and claim the amount in your return. If you are on turnover tax, confirm with KRA how a platform deduction is treated, as the Act does not spell this out.

VAT and eTIMS

• VAT. You must register within 30 days once taxable supplies reach KES 5 million in any 12 months, or you expect them to (VAT Act, s. 34). See our guide on crossing the 5 million line. Exported services are listed for zero-rating in the Second Schedule, but you must still register and file if you meet the threshold.
• eTIMS. Section 23A of the Tax Procedures Act requires anyone carrying on business to issue electronic tax invoices, VAT-registered or not. See our eTIMS guide.

Dates to diarise

What	When	Source
Annual return	30 April. The 2026 return is due by 30 April 2027	Finance Act 2026, s. 18
Balance of tax	30 April	Income Tax Act, s. 92A
Instalment tax	Applies unless your tax for the year is KES 40,000 or less	Income Tax Act, s. 12(5)
Turnover tax, if you are on it	20th of each month	Income Tax Act, s. 12C
VAT, if registered	20th of each month	VAT Act

Common mistakes

• Treating the 5 percent as the whole tax. It is a deduction towards your tax, not a replacement for it.
• Assuming KRA cannot see foreign income. Platforms now ask for your PIN and remit tax to KRA.
• Registering for turnover tax without checking. If your income is professional fees, the regime does not apply to it.
• Mixing money. One M-Pesa line or account for everything makes your income impossible to prove. Keep business and personal money apart.
• Not keeping records. You need five years of them, even if you are a one-person business.

If you have earned for years without filing, read how to catch up with KRA. Our tax team can help you work out which regime applies to your income.