Upwork to Collect VAT on Earnings of Kenyan Freelancers

The Kenyan government now requires taxation on income earned by freelancers on popular online work platforms like Upwork. Previously, Kenyans able to find freelance jobs on sites like Upwork could earn an untaxed income. 

However, Upwork has recently updated its terms for Kenyan users, stating that value-added tax (VAT) must now be collected and remitted to the Kenyan Revenue Authority (KRA).

Many Kenyan graduates and young professionals have turned to freelance work online in fields like software development, graphic design, and writing.

Significant numbers have gone through government-backed training programs to gain digital skills applicable to platforms like Upwork.

By creating profiles and submitting project proposals, Kenyans have secured ample freelance opportunities, especially in technical writing and assisting Western students.

With the tax changes, Kenyans earning through Upwork must now provide their KRA identification number. Upwork will then deduct the 16% VAT rate from earnings and submit the tax to KRA directly.

This means freelancers can no longer file nil tax returns and must report at least the earnings that Upwork submits to KRA after VAT deduction.

Upwork states that they must comply with taxation laws in all countries where they operate. Therefore, while temporary overseas residents can update their location and utilise lower VAT rates, Kenyans residing in-country cannot avoid paying the 16% VAT. To gain exemption, users must furnish a valid tax exemption certificate that Upwork can verify.

It remains uncertain whether other major freelance platforms will follow suit in enforcing tax compliance for Kenyan earners. However, Upwork’s policy change signals a broader effort to tax online labour that provides Kenyans with accessible work opportunities.

Going forward, users should factor VAT obligations into their rates and negotiations to ensure their freelance income retains viability amidst new tax duties.

Though taxation may incrementally eat into earnings, Upwork and similar platforms continue to offer young Kenyans flexible and location-independent livelihoods.

Finding global remote work opportunities remains a major benefit in a country with high youth unemployment. By adjusting to evolving tax policies, Kenyan freelancers can continue benefitting from online labour markets and contributing their skills to the world

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