Updated 30 October 2026
Updated October 2026
Yes, there is tax on online income in Kenya. Money you earn from freelancing, AI training, transcription, content creation or other online gigs counts as income under the Income Tax Act, whether it is paid to M-Pesa, PayPal or a bank. Residents must declare it in their annual KRA return, due by 30 June for the previous year. Since the Finance Act 2023, payments for digital content monetisation also carry a 5% withholding tax for residents (20% for non-residents), which is an advance against your final tax, not the end of it.
How KRA treats tax on online income in Kenya
KRA does not have a separate “online jobs tax”. Freelance and gig income is treated as business or professional income. In practice that means:
- You need a KRA PIN (free on iTax); many platforms and clients ask for one.
- You declare gross earnings and allowable expenses (data, equipment, platform fees) in your annual return.
- Foreign-paid income from a Kenyan resident’s work is still declared.
Withholding tax on digital content monetisation
According to KRA’s highlights of the Finance Act 2023, digital content monetisation is subject to withholding tax at 5% for residents and 20% for non-residents without a permanent establishment in Kenya, effective 1 July 2023. The Act defines it broadly: brand adverts and endorsements, sponsorships, affiliate commissions, subscriptions, merchandise and courses, memberships, licensing and crowdfunding.
| Type of online income | Withholding at source? | Declare in annual return? |
|---|---|---|
| Creator sponsorships, ads, affiliate commissions paid by a Kenyan payer | Yes, 5% (residents) | Yes, claim the WHT credit |
| Freelance work for foreign clients (Upwork, direct) | Usually not by the foreign platform | Yes |
| AI training, transcription, survey work | Depends on the payer | Yes |
KRA’s withholding tax guide says withholding is usually not a final tax for residents: you declare the income and the withholding certificates when you file, then pay any balance due. Payers must remit the tax within five working days.
Step by step: filing tax on online income
- Register or log in on iTax.
- Collect your platform earnings statements (Upwork, PayPal, bank) and M-Pesa statements for January to December.
- Total income and deductible business expenses.
- Download withholding certificates sent to your iTax email.
- File the individual return by 30 June and pay any tax due.
Records worth keeping
- Monthly platform statements and invoices.
- Receipts for laptops, phones, internet and software used for work.
- Exchange rates on the day you withdrew, for dollar earnings.
Where the money comes from
For options and payout costs, see our best online jobs that pay via M-Pesa and Upwork and Fiverr to M-Pesa fees. Property hosts should read Airbnb tax in Kenya. Job seekers can find step-by-step application guides on Job in Kenya, such as online jobs that pay through M-Pesa and how to get paid to train AI in Kenya.
Scam warning: legitimate platforms and research firms never charge you to join, unlock tasks or withdraw. Do not share your M-Pesa PIN, and report fraud to your mobile money provider, the DCI and the NC4 cyber incident hub.
Online income examples and how they are treated
| Example | How it is treated |
|---|---|
| A Nairobi designer paid by a UK client through Upwork, withdrawn to M-Pesa | Business income; declare in the annual return |
| A content creator paid by a Kenyan brand for a sponsored post | Digital content monetisation: the brand withholds 5%; declare and claim the credit |
| An affiliate marketer paid commission by a Kenyan company | Digital content monetisation (affiliate marketing is in the Act’s definition) |
| A mystery shopper paid fees by M-Pesa | Income; declare it |
Common mistakes
- Filing a “nil” return while earning online: M-Pesa and bank records show the income.
- Ignoring withholding certificates: they are a credit against your tax.
- Not keeping expense receipts, which reduces taxable profit.
- Waiting until 30 June to gather a year of statements.
Penalties
KRA’s withholding tax guide notes that payers who fail to deduct and remit face penalties and interest, with a late-payment penalty of 5% of the tax due. Individuals who file late or underpay also face penalties and interest, so file on time even if you are unsure of every figure.
Simple record-keeping routine
Set aside ten minutes at the end of each month. Download statements from every platform and your M-Pesa and bank accounts, and save them in one folder named by year and month. Note each payment, the client or platform, the currency and the amount received in shillings. Keep receipts for business costs such as internet bundles and equipment. When filing season comes, these records make the iTax return quicker and give you evidence if KRA ever asks questions.
Frequently asked questions
Do I pay tax on Upwork income in Kenya?
Yes. Kenyan residents should declare Upwork and other freelance earnings in their annual KRA return, along with allowable expenses.
What is the withholding tax on digital content in Kenya?
5% for residents and 20% for non-residents without a permanent establishment, effective 1 July 2023 under the Finance Act 2023.
Is withholding tax my final tax?
Usually not for residents. KRA says you declare the income and withholding certificates in your return and pay any balance.
When is the KRA return due?
Individual returns are due by 30 June for the previous calendar year.
Is affiliate income taxed in Kenya?
Yes. Affiliate marketing is in the Finance Act 2023 definition of digital content monetisation, which carries 5% withholding for residents, and the income must be declared.
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