Freelancer's tax

Hi guys.

I’m looking to try my hand at freelancing on some US platforms and was wondering what the taxation regime looks like. Do Kenyan freelancers pay taxes? I remember the 10K registration fee that was proposed in the 2018 (2019?) finance bill. Then there’s the presumptive tax. It’s all confusing. Any ideas from freelancers who may be here?

Your question is very broad but as someone who’s been freelancing for 5 years, I think if you do it as a consultant you just need to pay attention to withholding tax.

There’s is none that’s why CS Rotich gave that proposal in 2018 to apply for at least 3 years. Probably that will give the Govt time to net those that earn an income online.

The Income Tax Act states that as “income tax shall be charged for each year of income* upon all the income of a person, whether earned in or outside Kenya by a resident person, the whole of the gains or profits”. If you’re a Kenyan, by default there will be an income tax liability. Freelancers are supposed to pay taxes. If you’re working as yourself (individual) then you fall under “Income from Employment/Business - Services Rendered” bracket so you need to self assess and pay income tax which varies on the amount declared (refer to PAYE rates). If you are working as sole proprietor (registered business in Kenya) then your liability will be presumptive (if you will make less that 5m) and turnover tax (above 5m) plus PAYE, if you are company then it will be corporate income tax (30%) plus PAYE for the amount that you will pay yourself. For example, as a company, say you earned 100k and your salary from that amount is 30k. it will be 30% of 70k (Corporate Income Tax) as its your profit less salary expense. but from your 30k salary you’ll pay PAYE as per the PAYE rates.

CS Rotich noted that there’s no framework to tax people that earn an income online. That’s why he came up with a proposal for such people to pay 10K annually for next 3 years from 2018 I think up to 2021 at a time when proper regulation will be established to net guys that make a hustle online. Otherwise, he wouldn’t have made such a proposal.

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They’re getting ready with regulations to net online income. However, a good number of areas are still left out and might be covered in point K

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