If you’re moving to Nairobi, you already have enough on your plate — finding a place to live, settling into a new job, and figuring out how the city works.

Kenya’s tax system shouldn’t be another headache. The rules look complicated from the outside, but once you understand the basics, you’ll manage your taxes without stress.

Here’s what you need to know about how Kenya taxes expats, how PAYE works, what counts as taxable income, and how to stay compliant once you start earning money in Kenya.

Why Expats Need to Understand Kenya’s Tax System

Kenya doesn’t give foreigners a “simple expat tax rule.” If you work here, earn income here, or stay in the country long enough, the tax system treats you like everyone else. Kenya Revenue Authority (KRA) expects you to:

  • Register for a KRA PIN

  • Pay income tax if you earn money in Kenya

  • File a tax return every year

  • Keep your documents clean

Whether you’re in Kenya for a short contract or planning a longer stay, learning the basics early will save you trouble later.

When you arrive, staying in a furnished apartment gives you flexibility while you sort out your employment paperwork.

You can check out furnished and serviced apartments in Nairobi including options in Westlands, Kilimani, Lavington, and Kileleshwa if you want a place ready from day one.

1. When Expats Become Tax Residents

Kenya decides your tax status based on how long you stay in the country, not your passport.

You become a tax resident if:

  • You stay in Kenya for 183 days or more in a year

  • OR you stay for 122 days per year for three consecutive years

Once you hit these thresholds, Kenya treats you as a tax resident.
That means you must pay taxes on income you earn in Kenya.

Good news: Kenya does not tax your foreign income unless that income is connected to Kenya.

If you work for a foreign company remotely and your employer has no Kenyan presence, get clear guidance early so you avoid double taxation.

2. Understanding PAYE: How Employee Taxes Work

If you get hired by a Kenyan employer, your taxes get deducted automatically through PAYE, which stands for Pay As You Earn.

The employer handles the deductions. You only need to check your payslip to make sure everything is correct.

Your employer must send these deductions to KRA every month:

  • Income tax

  • PAYE bands depending on your income level

  • NHIF (National Hospital Insurance Fund)

  • NSSF (National Social Security Fund)

What this means for you

You get paid a net salary each month.
Your employer handles compliance.
But you still must file an annual tax return.

3. Tax Rates for Expats in Kenya

Kenya uses a graduated tax system. The more you earn, the higher your tax rate.

Income is taxed in bands. Rates change occasionally, so always check the current bands on the KRA website or through your employer.

If you’re on a high-income contract, expect to be in the top band.

4. If You’re Self-Employed or Consulting in Kenya

If you don’t work for a Kenyan employer — maybe you run a consulting business, operate a startup, or earn freelance income — you must handle your own taxes.

You’ll need:

  • A KRA PIN

  • Monthly or quarterly income declarations

  • Annual tax returns

  • Proper receipts or invoices

If your business operates in Nairobi, expect withholding tax on some clients. Many companies apply withholding tax when they pay consultants. That means they deduct part of your payment and send it directly to KRA.

The good part: you subtract this withheld tax from your total tax bill when filing your return.

5. What Happens If You Earn Income Abroad While Living in Kenya

This is where many expats worry unnecessarily.

Kenya only taxes income earned in Kenya. If your foreign income has no Kenyan source, KRA usually doesn’t tax it.

Examples of income not taxed in Kenya:

  • A salary from a foreign employer with no Kenyan office

  • Dividends from your home country

  • Rental income from property abroad

Examples of income taxed in Kenya:

  • A Kenyan employer pays your salary

  • A foreign employer posts you to a Kenyan branch

  • You do work physically in Kenya, even for a foreign client

  • You earn Kenyan rental income

  • You run a business in Kenya

The source of income, not the passport, determines your tax responsibility.

6. Filing Your Annual Tax Return

Even if your employer handles PAYE, you must file a tax return every year.
All filings happen on the iTax platform.

You’ll need:

  • Your KRA PIN

  • P9 form from your employer (summary of your income and taxes)

  • Any withholding tax certificates

  • Details of additional income, if any

The deadline is June 30 every year. If you file late, KRA charges penalties.

Most expats file their taxes themselves, but if you’re new and your contract has multiple income streams, use a tax agent during your first year.

7. NHIF and NSSF Explained

Most expats see NHIF and NSSF on their payslips and don’t understand what they are.

NHIF (Health Fund)

This gives you access to government and some private hospitals. It’s a mandatory contribution for employees.

NSSF (Pension Fund)

This is a national pension savings program. Your employer contributes, and you contribute.

If you leave Kenya long-term, you can apply to withdraw some NSSF contributions.

8. Withholding Tax for Expats

Withholding tax applies when:

  • You work as a consultant

  • You offer professional services

  • You run a business providing services

A company might withhold 5% or more from your payment. This is not a penalty — it’s a tax credit. You use it when filing your annual tax return.

9. Tax Responsibilities for Business Owners

If you move to Nairobi to start a business, Kenya treats you as a normal business owner. You must:

  • Register your business

  • Get a KRA PIN

  • Charge VAT if required

  • File monthly returns

  • File annual company returns

  • Keep proper accounts

VAT in Kenya is 16% unless your product is exempt or zero-rated.

Many expats underestimate Kenya’s record-keeping culture. Keep everything: receipts, invoices, contracts, and payment confirmations.

It saves you time and protects you in case of audits.

10. Avoiding Double Taxation

Kenya has Double Taxation Agreements (DTAs) with certain countries. These agreements prevent you from paying tax twice on the same income.

If you come from a country that has a DTA with Kenya:

  • You may avoid paying full tax in one country

  • You may get tax relief

  • You may claim tax credits

Your tax advisor can tell you if your country has an active DTA with Kenya.

11. Tax Penalties Expats Should Avoid

Kenya has strict penalties for:

  • Late filing

  • Under-reporting income

  • Missing PAYE filings

  • Failing to declare consultant income

  • Not submitting nil returns if you had no income

Even if you didn’t earn anything, you must file a nil return. That’s where many expats slip.

12. Tips to Stay Compliant in Kenya

Here’s what works for most foreigners living in Nairobi:

Get your KRA PIN when you arrive

You need it for everything — bank accounts, contracts, even buying property.

Check your payslip every month

Make sure PAYE, NHIF, and NSSF are deducted correctly.

Keep your immigration status clean

Your work permit affects your tax status.

Use a tax consultant during your first year

Not mandatory, but helpful.

Store all your documents

Don’t throw anything away.

Living in Nairobi While You Settle Your Finances

Your first few months in Nairobi will be busy. You’ll have immigration appointments, HR paperwork, bank visits, and tax registrations. You’ll move around the city a lot.

If you want to make your transition easier:

It saves you time and keeps your move stress-free.