Quick Answer
In Kenya, businesses paying freelancers for professional, consultancy or contractual services must deduct withholding tax at source (typically 5% for resident professional or consultancy fees and 20% for non-residents) and remit it to KRA within 5 working days, then issue a WHT certificate.
Key Takeaways
- The payer, not the freelancer, is the withholding agent legally responsible for deducting and remitting tax before payment.
- For residents, professional and consultancy fees are typically taxed at 5% and contractual services at 3%, while non-residents are generally taxed at 20%.
- Withheld tax must be remitted to KRA within 5 working days, and a withholding tax certificate must be issued to the freelancer via iTax.
- For most resident freelancers WHT is an advance payment, credited against their final tax liability when they file annual returns.
- From 2026, eTIMS expense validation and automated WHT matching mean freelancer payments without proper invoicing risk being disallowed and harder to under-declare.
Frequently Asked Questions
What withholding tax rate applies to resident freelancers in Kenya?
For resident freelancers, professional or consultancy fees are typically taxed at 5%, contractual services at 3%, and training and digital services at 5%, with non-residents generally taxed at 20%.
Who is responsible for deducting withholding tax on freelancer payments?
The payer, such as a registered company, NGO, government agency or individual running a business, acts as the withholding agent and is legally responsible for deducting and remitting the tax, not the freelancer.
How quickly must withholding tax be remitted to KRA?
Withholding tax must be deducted before payment is released and remitted to KRA within 5 working days after deduction, and a WHT certificate must be issued to the freelancer through iTax.
Is withholding tax the final tax for freelancers in Kenya?
For most resident freelancers it is not final; it is an advance payment credited against their annual income tax liability, though for certain cases such as non-resident payments it may be a final tax.
What are common mistakes businesses make with freelancer taxation?
Common errors include paying freelancers gross without deducting WHT, misclassifying consultancy as goods, delayed remittance, failing to issue certificates, and not verifying the freelancer's KRA PIN status.
