KRA Tax Requirements for Remote Workers Kenya 2026

Remote work income is taxable in Kenya, whether earned through Upwork, international clients, or local companies. Understanding KRA requirements protects you from penalties and helps you keep more of your hard-earned money. Here’s everything Kenyan remote workers must know about taxes in 2026.

Do Remote Workers Need to Pay Tax?

Short answer: Yes

Long answer:

• All income earned in Kenya is taxable
• “In Kenya” includes remote work done from Kenya
• Doesn’t matter if client is international
• Doesn’t matter if payment comes through PayPal/Payoneer
• Doesn’t matter if you work from home
• If you’re earning, you’re supposed to be declaring and paying tax

Reality check:

• Many freelancers don’t declare income (risky)
• KRA is increasingly monitoring digital payments
• M-PESA transactions above certain threshold flagged
• Bank transfers from abroad monitored
• Consequences of non-compliance getting more serious

Smart approach: Understand requirements, comply appropriately, minimize risk

KRA PIN Registration

What is it: Kenya Revenue Authority Personal Identification Number

Who needs it: Everyone earning income in Kenya

Cost: Free

How to register:

Online (iTax) - Recommended:

1. Go to itax.kra.go.ke
2. Click “New PIN Registration”
3. Fill out form:
   • Full names (as per ID)
   • ID number
   • Date of birth
   • Email address
   • Phone number
   • Physical address
   • Postal address
4. Select taxpayer type:
   • Individual Resident
   • Income source: Business/Self-Employment (for freelancers)
5. Submit application
6. Download acknowledgment slip
7. Print slip
8. Take to nearest KRA office with:
   • ID copy
   • Acknowledgment slip
9. PIN certificate issued immediately

Timeline: Same day if you visit KRA office with printed slip

Alternative - At KRA office directly:

• Visit nearest KRA office (Huduma Centre)
• Fill Form KRA F001 (PIN registration)
• Provide ID copy
• Get PIN immediately

KRA offices in major towns:

• Nairobi: Times Tower, Teleposta Towers, Westlands, Hurlingham
• Mombasa: Nkrumah Road office
• Kisumu: Mega Plaza
• Nakuru: Cedar Mall
• Eldoret: Ruperts Plaza

Important: Register as soon as you start earning, not when you hit certain threshold

Types of Tax for Remote Workers

Income Tax (Individual)

Who pays: Self-employed individuals (freelancers)

Tax rates (2026):

Monthly equivalent:

• Up to Ksh 24,000/month: 10% tax
• Ksh 24,001 - 32,333/month: 25% on amount above 24k
• Above Ksh 32,333/month: 30% on amount above 32,333

Personal relief: Ksh 2,400 per month (Ksh 28,800 annually)

Effective rates (after personal relief):

Example 1: Earning Ksh 30,000/month (Ksh 360,000/year):

• First Ksh 288,000 at 10% = Ksh 28,800
• Next Ksh 72,000 (360k - 288k) at 25% = Ksh 18,000
• Total tax: Ksh 46,800
• Less personal relief: Ksh 28,800
• Net tax: Ksh 18,000/year (Ksh 1,500/month)
• Effective rate: 5% of gross income

Example 2: Earning Ksh 50,000/month (Ksh 600,000/year):

• First Ksh 288,000 at 10% = Ksh 28,800
• Next Ksh 100,000 (388k - 288k) at 25% = Ksh 25,000
• Next Ksh 212,000 (600k - 388k) at 30% = Ksh 63,600
• Total tax: Ksh 117,400
• Less personal relief: Ksh 28,800
• Net tax: Ksh 88,600/year (Ksh 7,383/month)
• Effective rate: 14.77% of gross income

Example 3: Earning Ksh 100,000/month (Ksh 1,200,000/year):

• First Ksh 288,000 at 10% = Ksh 28,800
• Next Ksh 100,000 at 25% = Ksh 25,000
• Next Ksh 812,000 at 30% = Ksh 243,600
• Total tax: Ksh 297,400
• Less personal relief: Ksh 28,800
• Net tax: Ksh 268,600/year (Ksh 22,383/month)
• Effective rate: 22.38% of gross income

NHIF (National Hospital Insurance Fund)

Who pays: All income earners

Rates (2026):

Payment: Monthly through iTax

Benefits: Healthcare access at NHIF-accredited facilities

NSSF (National Social Security Fund)

New rates (2026):

• Employee contribution: 6% of pensionable pay
• Self-employed: 12% (6% employee + 6% employer portion)
• Minimum: Ksh 400/month
• Maximum: Based on upper earnings limit (typically Ksh 2,160/month max)

For freelancers earning Ksh 50,000/month:

• NSSF: Ksh 2,160 (capped amount)

For freelancers earning Ksh 20,000/month:

• NSSF: Ksh 2,400 (12% of 20k)
• But capped at Ksh 2,160

Payment: Monthly through iTax

Benefits: Pension upon retirement (age 60 or early retirement conditions)

Housing Levy

Rate: 1.5% of gross income

Who pays: All income earners (as of 2024 legislation)

For freelancers earning Ksh 50,000/month:

• Housing Levy: Ksh 750/month

Payment: Monthly through iTax

Benefits: Access to affordable housing schemes (future benefit)

Tax Filing Requirements

Income Tax Returns

Who must file: Everyone with income

When to file:

• Personal returns: By June 30th each year
• Covers previous calendar year (Jan-Dec)
• Late filing: Penalties apply

What to file:

• Form iTax Self-Assessment
• Declare all income sources
• Claim allowable deductions
• Calculate tax due
• Pay any balance

Filing frequency:

• Annual (once per year)
• Due June 30th for previous year

Example: By June 30, 2026, you file returns for income earned Jan 1 - Dec 31, 2025

Advance Tax (Installment Tax)

What it is: Paying tax in installments throughout the year (instead of lump sum when filing)

Who should pay: Anyone expecting to owe more than Ksh 40,000 in tax

When to pay:

• 4 installments per year
• Due: April 20, June 20, September 20, December 20

How much:

• Estimate your annual income
• Calculate expected tax
• Divide by 4
• Pay each quarter

Example - Earning Ksh 50,000/month:

• Annual income: Ksh 600,000
• Expected tax (from earlier calculation): Ksh 88,600
• Quarterly payment: Ksh 22,150
• Pay Ksh 22,150 on Apr 20, Jun 20, Sep 20, Dec 20

Benefit: Spread tax burden throughout year, avoid large payment when filing

Alternative: Pay all tax when filing in June (if you can afford lump sum)

Monthly Tax Obligations

For organized freelancers (recommended approach):

Calculate each month:

• Gross income for month
• Income tax due
• NHIF contribution
• NSSF contribution
• Housing Levy

Set aside immediately:

• Put tax money in separate account/mobile money
• Don’t touch it
• Pay quarterly (installment tax) or annually

Monthly calculation example (Ksh 50,000 income):

• Income tax: ~Ksh 7,383
• NHIF: Ksh 1,200
• NSSF: Ksh 2,160
• Housing Levy: Ksh 750
• Total to set aside: Ksh 11,493 (23% of income)

Money management:

• Earn Ksh 50,000
• Set aside Ksh 11,493 for taxes
• Live on Ksh 38,507

iTax System - How to File

Setting Up iTax Account

Already have PIN: Log in at itax.kra.go.ke

First time login:

1. Go to itax.kra.go.ke
2. Click “Forgot Password/First Time Login”
3. Enter PIN
4. Verify ID number
5. Create password
6. Set security questions
7. Login successful

Filing Annual Returns (Step-by-Step)

Do this in June each year:

Step 1: Prepare documents

• Bank statements (all accounts)
• M-PESA statements
• PayPal/Payoneer withdrawal records
• Invoices sent to clients
• Business expense receipts

Step 2: Calculate total income

• Add all income from all sources
• Convert foreign currency at CBK rate
• Total = your gross income

Step 3: Calculate deductible expenses

Allowable business expenses:

• Internet costs
• Phone/airtime
• Computer/equipment (depreciation)
• Software subscriptions
• Training/courses
• Office supplies
• Business travel
• Professional fees
• Co-working space rent

Keep receipts for:

• All expenses claimed
• KRA may ask for proof

Step 4: Login to iTax

Step 5: Navigate to Returns

• Returns → File Returns
• Select return type: “Income Tax - Resident Individual”
• Select year (e.g., 2025)

Step 6: Enter income details

• Employment income: Ksh 0 (if purely freelance)
• Business income: [Your total income]
• Other income: [Any other sources]

Step 7: Enter deductions

• Business expenses: [Total of allowable expenses]
• NHIF paid: [Total NHIF for year]
• NSSF paid: [Total NSSF for year]
• Housing Levy paid: [Total for year]
• Personal relief: Automatically calculated

Step 8: System calculates tax

• Taxable income = Gross income - Deductions
• Tax due calculated automatically
• Less: Tax already paid (installments)
• Balance due OR refund shown

Step 9: Make payment (if balance due)

• Generate payment slip
• Pay via M-PESA (Paybill 572572)
• Or bank payment
• Or directly through iTax

Step 10: Submit return

• Review all details
• Click “Submit”
• Acknowledgment receipt generated
• Save receipt for records

Monthly/Quarterly Tax Payments

Paying installment tax:

Step 1: Login to iTax

Step 2: Payments → Make Payment

• Select: “Installment Tax”
• Enter amount (quarterly estimate)
• Generate payment slip

Step 3: Pay

• M-PESA: Paybill 572572
• Account: Your KRA PIN
• Amount: As per slip
• Save confirmation

Step 4: Update iTax

• Return to iTax
• Upload payment confirmation
• System updates your account

Paying NHIF:

• Similar process
• Select “NHIF”
• Generate slip
• Pay to NHIF Paybill

Paying NSSF:

• Similar process
• Select “NSSF”
• Generate slip
• Pay to NSSF Paybill

Tax Compliance Strategies

Strategy 1: The Transparent Approach (Safest)

What you do:

• Declare all income
• Pay all taxes due
• File on time every year
• Keep meticulous records

Pros:

• Zero legal risk
• Can apply for tenders/contracts requiring tax compliance
• Sleep peacefully
• Build credit history with banks

Cons:

• Highest tax burden
• More paperwork
• Need accounting discipline

Best for:

• High earners (Ksh 100k+/month)
• Those seeking loans/mortgages
• Long-term business builders
• Risk-averse individuals

Strategy 2: The Threshold Approach

What you do:

• Register when you cross Ksh 500k/year in income
• Declare income accurately once registered
• Before registration, operate informally

Legal status: Grey area (technically should register immediately)

Pros:

• Delays tax burden during lean early months
• Time to establish income stability
• Lower initial costs

Cons:

• Risk of backdated penalties if KRA discovers earlier income
• Cannot get tax compliance certificates
• Informal status limits opportunities

Best for:

• Beginners (first 6-12 months)
• Those earning under Ksh 30k/month initially
• Testing remote work viability

Important: Once you register, declare all income going forward accurately

Strategy 3: The Cash Business Approach (Risky)

What some freelancers do (not recommended):

• Don’t register for PIN
• Keep all transactions cash/M-PESA
• Don’t declare income
• Fly under radar

Legal status: Tax evasion (illegal)

Pros:

• Keep all income (no tax)
• No paperwork

Cons:

• Illegal (penalties if caught)
• KRA increasingly monitoring digital payments
• Cannot get tax compliance certificates
• Cannot open business bank accounts
• Cannot get loans requiring income proof
• Risk of account freezing
• Penalties + interest on undeclared income if discovered

Our recommendation: Don’t do this

Reality: Many small freelancers operate this way, but risk is increasing as KRA digitizes monitoring

Strategy 4: The Hybrid Approach (Practical)

What you do:

• Register for PIN (free, shows good faith)
• Declare income conservatively (reasonable estimate)
• Pay some tax (show compliance)
• Not 100% of actual income declared

Legal status: Grey area (underreporting)

Pros:

• Tax burden reduced
• Some compliance (better than zero)
• Can get tax compliance certificate
• Moderate risk

Cons:

• Still technically non-compliant
• Risk if KRA audits and finds underreporting
• Penalties if discovered

Practical note: This is what many Kenyan freelancers do in practice

Our stance: We advocate full compliance, but we acknowledge reality

Deductions and Expense Tracking

Allowable Business Deductions

What you can deduct:

1. Internet & Communication:

• Home internet subscription: 100% deductible
• Phone/airtime: 100% if business line, 50% if mixed use
• M-PESA transaction fees: 100%

2. Equipment:

• Laptop/computer: Depreciate over 3 years (33% per year)
• Phone: Depreciate over 2 years (50% per year)
• Backup devices: Same depreciation

3. Software & Subscriptions:

• Adobe Creative Cloud: 100%
• Microsoft Office: 100%
• Grammarly Premium: 100%
• Domain/hosting: 100%
• Project management tools: 100%

4. Workspace:

• Co-working space membership: 100%
• Home office rent: Portion if dedicated workspace (tricky, need documentation)

5. Training & Development:

• Online courses: 100%
• Certifications: 100%
• Books: 100%
• Conference/seminar fees: 100%

6. Professional Services:

• Accountant fees: 100%
• Lawyer fees: 100%
• Website designer: 100%

7. Business Travel:

• Travel to client meetings: 100%
• Accommodation: 100%
• Meals during business travel: 100%

What you CANNOT deduct:

• Personal groceries
• Personal entertainment
• Personal car (unless registered business vehicle)
• Family expenses
• Rent for personal living space (unless dedicated home office)

Record Keeping Best Practices

Monthly habit:

1. Income tracking:

• Spreadsheet with date, client, amount
• Screenshot platform earnings
• Save bank/M-PESA statements
• Save PayPal/Payoneer statements

2. Expense tracking:

• Same spreadsheet: date, category, amount, receipt
• Photo receipts immediately (store digitally)
• Separate business expenses from personal

3. Monthly reconciliation:

• Last day of month: Total income and expenses
• Calculate tax due
• Set aside tax money
• Update yearly totals

Annual habit:

Before June (filing deadline):

• Compile 12 months of income/expense data
• Summarize by category
• Gather all receipts (organized by month/category)
• Calculate total income, total deductible expenses
• Prepare for filing

Storage:

• Keep records for 5 years (KRA requirement)
• Digital + physical backups
• Organized by year and month

Tax Penalties and Consequences

Late filing:

• Penalty: 5% of tax due OR Ksh 2,000 (whichever is higher)
• Interest: 1% per month on unpaid tax

Non-filing:

• Penalty: 25% of tax due OR Ksh 10,000 (whichever is higher)
• Possible prosecution

Underreporting income (if audited):

• Penalty: 100% of tax shortfall + interest
• Possible prosecution for tax evasion

Non-payment after filing:

• Interest: 1% per month
• Enforcement actions: Bank account attachment, asset seizure

Prosecution outcomes:

• Fines: Up to Ksh 500,000
• Imprisonment: Up to 3 years
• Both fine and imprisonment possible

Reality check: KRA focuses on large cases typically, but enforcement increasing for digital income

When to Get Professional Help

DIY sufficient when:

• Income straightforward (one freelance stream)
• Expenses simple
• Earning under Ksh 500k/year
• Comfortable with iTax system

Get accountant when:

• Earning over Ksh 1 million/year
• Multiple income streams
• Complex expenses
• VAT registration required (turnover over Ksh 5 million)
• Received KRA audit notice
• Want to optimize tax legally

Accountant costs:

• Annual return filing: Ksh 5,000-15,000
• Monthly bookkeeping: Ksh 3,000-10,000/month
• Tax planning consultation: Ksh 5,000-20,000
• Audit representation: Ksh 20,000-100,000+

Worth it when: Time saved + tax saved + penalty avoided > cost

Quick Start Tax Compliance

Month 1:

• ✅ Register for KRA PIN
• ✅ Activate iTax account
• ✅ Create income/expense tracking spreadsheet
• ✅ Open separate M-PESA account for tax money

Month 2-11:

• ✅ Track income and expenses monthly
• ✅ Set aside ~25% of income for taxes
• ✅ Pay quarterly installment tax (April, June, Sept, Dec)

By June (first year):

• ✅ File annual return for previous year
• ✅ Pay any balance due
• ✅ Save acknowledgment receipt

Ongoing:

• ✅ File every June
• ✅ Keep records updated
• ✅ Pay taxes on time
• ✅ Stay compliant

Taxes aren’t optional, but they’re also not as scary as they seem. With basic organization and quarterly payments, you can stay compliant without major financial burden. The peace of mind knowing you’re legal, plus the benefits of tax compliance certificates for future opportunities, makes it worthwhile. Start with PIN registration this week, set up your tracking system, and join the ranks of legitimate, tax-paying Kenyan remote workers.