Treasury Targets Kenyans in Diaspora with New Tax Rules

Kenya's National Treasury and Economic Planning has unveiled a tax policy revision that will impact Kenyans working remotely from overseas locations.

Cabinet Secretary John Mbadi announces that these workers will now be required to obtain a Personal Identification Number (PIN) from the Kenya Revenue Authority (KRA). This initiative is incorporated into the Tax Laws (Amendment) Bill, 2024, alongside companion legislation including the Tax Procedures (Amendment) Bill 2024 and the Public Finance (Amendment) Bills. The legislative proposal seeks to modify the First Schedule of the Tax Procedures Act, specifically targeting employees who work remotely outside Kenya while maintaining employment with Kenyan companies.

In September 2024, the National Treasury initiated public consultation regarding PIN requirements for overseas remote workers, citing constitutional Articles 174 and 232. The system will function similarly to the existing Pay As You Earn (PAYE) framework, requiring both employers and employees to ensure compliance through proper PIN registration. A major concern emerging from this policy is the potential for double taxation, as remote workers might face tax obligations both in their country of residence and in Kenya. To address this challenge, Kenyan employers will need to engage with foreign governments to establish clear tax residency guidelines through international treaties.

The implementation will require employers to verify active KRA PINs for their remote workforce, with both parties bearing responsibility for compliance. The KRA frames this initiative as part of its evolution from an enforcement-focused approach to a more facilitative role in global tax administration. The agency aims to enhance its international reputation while improving tax and customs compliance through data-driven strategies. This policy shift coincides with the government's broader efforts to promote overseas employment opportunities for Kenyans as evidenced by Labour and Social Protection Cabinet Secretary Alfred Mutua's recent announcement of job openings in Qatar.

To support this new tax framework, the KRA plans to upgrade its digital infrastructure, including the development of an online portal for PIN registration and tax filing. These technological improvements are designed to streamline the process and reduce administrative burdens for all parties involved. The broader initiative includes measures to enhance Kenya's business environment, such as simplified company registration procedures and reduced regulatory requirements to attract foreign investment.