Understanding Your Tax Obligations Under the Kenya Income Tax Act for Diaspora filing.
- Working Abroad, Paid Abroad — Do You Still Owe KRA?
Q: If I work abroad and earn my salary outside Kenya, do I still pay tax in Kenya?
A: It depends on your tax residency status.
Under Section 3 of the Income Tax Act (Cap. 470):
- Residents are taxed on worldwide employment income and business income where a Kenyan resident individual carried on their business partly in Kenya and partly outside Kenya
- Non-residents are taxed only on Kenyan-sourced income
You are considered a Kenyan tax resident if you meet any of the following:
- You have a permanent home in Kenya and are present for part of the year, OR
- You are in Kenya for 183 days or more in a year of income, OR
- You are in Kenya for an average of 122 days per year over 3 years
Key implication:
Even if your salary is paid abroad, it may still be taxable in Kenya if you are a Kenyan tax resident.
- Side Hustles, Freelancing & Remote Work — How KRA Taxes Global Income
Q: Are Upwork, Fiverr, and online freelance earnings taxable in Kenya?
A: Yes — if you are a Kenyan tax resident and non -resident but earned that income while in Kenya
Under the Income Tax Act:
- All global employment or business income carried partly in Kenya and partly outside Kenya is taxable for residents
- Includes: consultancy, digital work, remote services, and online gigs
Even if paid via PayPal or foreign platforms, the income is still reportable.
- Owning Property in Kenya While Abroad — What Taxes Apply?
Q: I live abroad but own rental property in Kenya. What taxes apply?
A: Rental income earned in Kenya is always taxable in Kenya — regardless of residency.
Key rules:
- Subject to Residential Rental Income Tax (RRIT) at 7.5% of gross rent (for qualifying residential landlords)
- Or normal income tax rates depending on structure and thresholds
- Withholding tax of 30% on gross rent applies for non-resident landlords (and it is a final tax) and the obligation to deduct and remit to KRA rests with the tenant.
Common mistake:
Many diaspora landlords fail to file returns assuming “KRA cannot track foreign owners” — but rental payments are now closely monitored through tenants and agents.
- Sending Money Home — Is It Taxable?
Q: Are remittances from abroad taxed by KRA?
A: No — remittances are NOT taxable income.
However:
KRA may review:
- Whether funds are gifts, income, or business proceeds
- Source of large or frequent transfers
- Bank data under compliance monitoring systems
Risk trigger:
If remittances resemble undeclared business income, KRA may reclassify them as taxable.
- Avoiding Double Tax — How Foreign Tax Credit Works
Q: If I pay employment tax abroad, can I offset it in Kenya?
A: Yes — under Section 39 of the Income Tax Act (Foreign Tax Credit relief).
You may claim credit if:
- You are a Kenyan citizen
- Employment Income is taxed in a foreign jurisdiction
- Proper documentation is available and it is submitted to KRA Policy and Tax Advisory Division for approval
Required documents:
- Foreign tax certificate
- Proof of employment income
- Tax return filings abroad
- Double Tax Agreements (DTAs) — Are You Missing Benefits?
Q: Do DTAs actually reduce my tax?
A: Yes — Kenya has DTAs with several countries that can:
- Reduce withholding tax rates
- Prevent double taxation
- Clarify taxing rights between countries
- Living Abroad but Receiving KRA Messages — Why?
Q: Why am I getting KRA SMS or WhatsApp messages while abroad?
A: KRA uses automated compliance systems that pull data from:
- Employers
- eTIMS invoices
- Withholding tax records
As long as you have an active KRA pin may receive:
- Filing reminders
- Outstanding tax alerts
- Compliance flags
8. Do You Still Need to File Nil Returns While Abroad?
Q: If I have no Kenyan income, do I still file returns?
A: It depends on your tax status.
- If you are registered as a taxpayer, filing NIL returns may still be required
- Failure to file attracts penalties even with zero income
Risk:
Many diaspora taxpayers accumulate penalties due to non-filing even when they have an active KRA pin.
- Top Tax Mistakes Kenyans in Diaspora Make
Q: What are the most common mistakes?
A: The top 7 include:
- Not filing tax returns
- Ignoring Kenyan rental income
- Misunderstanding residency rules
- Assuming foreign income is exempt
- Not claiming Foreign Tax Credits
- Not using Double Tax Agreements
- Not updating KRA taxpayer status after relocation
FINAL NOTE
Under Kenyan tax law, an individual’s residency status is a key determinant of whether their income is taxable in Kenya.
If you are uncertain about your residency status, potential KRA exposure, or overall compliance position, it is advisable to undertake a structured tax review with a tax expert to mitigate the risk of penalties or double taxation.
Tax laws are also subject to change from time to time, particularly through annual Finance Acts, and it is important to stay updated on any developments that may affect your tax obligations.
Disclaimer: Any advice in this publication is limited to the conclusions specifically set forth herein and is based on the completeness and accuracy of the stated facts, assumptions and/or representations included. In rendering our advice, we may consider legal authorities that are subject to change, retroactively and/or prospectively, and any such changes could affect the validity of our advice. We will not update our advice for subsequent changes or modifications to the law and regulations, or to the judicial and administrative interpretations thereof.
