Forex profits are taxable in Kenya. If you trade forex, whether with a CMA-licensed broker or an offshore broker, you are expected to report profits to the Kenya Revenue Authority (KRA) and pay income tax. How much you pay will depend on several factors, including your residency status, the sourcing of the income, your total annual income, and whether you trade as an individual or through a company.
Kenyan residents are taxed on worldwide income, while non-residents are taxed on Kenyan-sourced income.
IMPORTANT:
This article does not constitute professional tax advice. If you are a forex trader, or planning to become a forex trader, in Kenya, you can contact the Kenya Revenue Authority for advice. It is important that you obtain advice for your specific situation, and also keep in mind that tax rules are subject to change. Many retail forex traders in Kenya have both trading income, investment income, employment income, and small-business income to handle, and getting it right requires a comprehensive approach.
Are forex profits business income or capital gains?
For most individual retail traders in Kenya, forex profits are treated as income and are not subject to capital gains tax (CGT). CGT in Kenya is aimed at gains from the transfer of property like land and shares, and it is charged at a flat 15% on the net gain. CGT doesn’t normally apply to spot currency or CFD trading profits. Your forex profits are therefore added to your other taxable income and taxed at the graduated individual rates, in accordance with KRA rules.
Who has to file and pay?
If you’re a Kenyan tax resident, you file an annual Individual Income Tax Return and declare your trading income from all sources, even foreign sources, and even if the cash stayed in your trading account. Residents file returns between January 1 and June 30 for the prior year; non-compliance attracts penalties and interest.
If you’re non-resident, you only declare Kenyan-sourced trading income (for example, trading income from a Kenyan broker).
How is residency determined?
KRA treats you as resident if you have a permanent home in Kenya and are present at any time in the tax year, or you’re in Kenya for at least 183 days in the year, or you average 122 days per year over the current and two preceding years. Residency drives whether you report worldwide trading income to the KRA.
Effective 1 July 2022, the Finance Act, 2022 defined the phrase ‘permanent home’ to mean a place where an individual resides or that is available to that individual for residential purposes in Kenya, or where, in the opinion of the Commissioner, the individual’s personal or economic interests are closest.
What rates apply to individual fx traders?
Kenya’s individual rates are progressive. Since July 1, 2023, the bands start at 10% and top out at 35% once annual taxable income exceeds KES 9,600,000. Personal relief applies to residents. Your forex profits are simply part of that income stack.
Installments
If, after netting reliefs, your expected annual tax exceeds KES 40,000 and it isn’t fully covered by withholding (most traders have no withholding), you’re required to pay tax in four installments during the year: 20 April, 20 June, 20 September and 20 December. Each installment is generally 25% of your estimate (or 110% of last year’s liability if you prefer the safe-harbour method). Any balance is settled at final filing.
What records should I keep?
Hold onto contract notes, broker statements, platform reports showing realized P&L, deposits and withdrawals, and your bank/mobile-money statements. Convert amounts to KES using KRA’s exchange rates for the relevant week or day when computing taxable income in shillings. Clean and comprehensive records can speed up reconciliation and reduce disputes.
Deductions and costs
Individual traders can deduct expenses wholly and exclusively incurred in earning that trading income. For a forex trader, that could for instance be platform subscriptions, data feed costs, and transaction costs, provided you can support your cost claims with invoices or statements. Keep it well documented, as vague expenses are more likely to get rejected.
If you trade via a company, corporate rules apply, and bookkeeping needs to be tighter. (Seeking professional guidance is advisable.)
Trading losses
Trading losses can offset trading profits of the same year. Carry-forward of business losses is permitted subject to Income Tax Act conditions and timely filing. If losses are significant, KRA will be even more inclined to look for proper books to back your numbers before allowing offsets.
Local vs foreign brokers: does it change tax?
Not for Kenyan residents. Residents owe tax on forex profits whether the broker is local or foreign, and whether profits were withdrawn or left on platform. The practical differences are documentation and audit trail. CMA-licensed firms usually issue Kenya-friendly statements and process withdrawals through local rails, which makes reconciling in KES easier. If you use an offshore broker, make sure you can export full trade histories and monthly statements that KRA can read.
For non-resident traders, see: Kra.go.ke/images/publications/Foreign-Investors-Tax-Guide-Document.pdf
Filing flow for an individual trader
Open iTax with your PIN, choose the Individual Income Tax Return for the year, and populate the business/other income schedule with your net forex profit (in KES). Attach or retain working papers showing how you got from broker statements to the taxable figure. Pay any balance by 30 June if you’re on the calendar year. If you cross the KES 40,000 threshold for the new year, start paying installments on the four dates listed earlier.
Example 1: Resident individual with a USD-denominated trading account
You make USD 4,800 realized profit during 2025 and incur USD 300 in swap/commission costs. Convert each month’s net to KES using KRA’s rates for that period, sum to annual KES profit, add to your other income, apply the 10%–35% bands, subtract reliefs, then compare to any installments paid (if applicable). If total tax due for 2025 is KES 120,000 and you paid KES 90,000 in installments, you’ll settle KES 30,000 at filing.
Example 2: Loss year
You realize a KES 150,000 trading loss and have no other business income. File the return on time and carry the loss forward to offset future trading profits, in accordance with the carry-forward rules.
Examples of common trouble spots
- Name mismatches between your iTax PIN and broker account can slow refunds and raise questions during audits.
- Missing exchange-rate workings is another common problem. Save the KRA rate sheet you used.
- Traders who do not pay installments on time end up having to pay interest.
Corporate route vs. personal account
Some forex traders (especially if they are high-volume) form a Kenyan company for clearer expense treatment and separation from personal income. Companies pay corporate income tax and also make installment payments during the year. This route adds admin (e.g. financial statements, iTax for companies) but can be cleaner, and it can be worth the extra administration if the trading volume is big enough.
FAQ
Do I pay CGT on forex trades?
No. CGT is for property transfers like land and shares and is currently 15%. Forex trading profits are taxed as income.
What if I live abroad most of the year?
If you’re non-resident (under applicable tax rules for residency) and have no Kenyan-sourced trading income, Kenya generally doesn’t tax those profits. If you meet the residency tests, you report worldwide income, including forex trading profits.
When is the annual filing window?
From January 1 to June 30 for the prior year.
When are installments due?
20 April, 20 June, 20 September, 20 December. Most traders who owe more than KES 40,000 for the whole year fall into this bucket.
Which exchange rate do I use to convert USD profits?
Use KRA’s published rates for the relevant week or day and keep the file you referenced with your workings.
Understanding the Kenyan Taxation Framework
In Kenya, public revenue is generated through a combination of direct and indirect taxes. Direct taxes are levied directly on individuals and entities based in income or profit, while indirect taxes are levied on goods and services.
The tax system is primarily administered by the Kenya Revenue Authority (KRA).
The main types of direct taxes in Kenya
- Individual Income Tax (PAYE). This is a tax on employment income. The employer will deduct this.
- Corporate Tax. Resident companies pay 30% tax on taxable profits and non-resident companies pay 37.5% tax on taxable profits.
- Turnover Tax (TOT). Small businesses with an annual turnover between 1 million and 25 million KES pay a 1.5% turnover tax (since 1 July 2023).
Turnover Tax (TOT) in Kenya is a simplified tax regime designed for small businesses. For qualifying businesses that opt in, the 1.5% tax on gross turnover generally replaces normal income tax on that business income, and simplifies compliance compared with filing full corporate or business income tax returns. Other obligations (such as PAYE on employees or certain withholding taxes) can still apply - Withholding Tax (WHT). For specific payments (e.g. dividends, interest, royalties), tax WHT is deducted at the source.
- Capital Gains Tax (CGT). Since 2022, there has been a 15% tax on gains from the sale of property. CGT is a tax on the profit (gain) made from the sale or transfer of capital assets, in accordance with the Income Tax Act (Cap. 470). It applies to the transfer and sale of land, buildings, shares, and other capital assets.
Gains from certain financial derivatives earned by non-resident persons are subject to a separate 15% withholding tax under Finance Act 2022. This is a different mechanism from CGT and mainly targets non-resident derivative traders.
The main types of indirect taxes in Kenya
- Value Added Tax (VAT). The standard rate is 16%. Some items are zero-rated (e.g. exports) or exempt (e.g. certain basic foodstuffs, education, health services).
- Excise Duty. This duty is charged on specific goods, including alcohol, tobacco, fuel, and motor vehicles, and on certain services such as mobile money transfer fees.
- Customs duty. This duty is charged on imported goods in accordance with the East African Community (EAC) Common External Tariff.
Tax Administration in Kenya
In Kenya, taxes are administered by the Kenya Revenue Authority (KRA), and KRA has the authority to audit, investigate, and impose penalties for non-compliance.
The main platform used by those who pay Kenyan taxes is the iTax, an online portal for registration, filings, and the payment of taxes. All taxpayers in Kenya must obtain a Personal Identification Number (PIN).
Important deadlines:
- PAYE is filed and paid by the 9th of every month.
- VAT is filed and paid by the 20th of every month.
- For corporate tax, annual returns are due 6 months after the end of the financial year.
- Installment tax is paid quarterly, by 20 April, 20 June, 20 September, and 20 December.
Legal Basis
The foundation for the Kenyan tax system is found in the Constitution (2010), which establishes the broader principles. The specific tax laws are enacted by parliament, e.g. the Income Act Tax and the VAT Act. There is also a Finance Act, which updates and amends existing tax laws. In addition to these main legs of the Kenyan tax system, we have the Tax Procedures Act, which establishes rules for enforcement, appeals, compliance, etcetera.
Examples of notable parts of the constitution that deals with taxation:
- Art. 201: Principles of public finance, such as equity, transparency, and accountability in tax administration.
- Art. 209: Gives Parliament power to impose taxes and charges. It outlines types of taxes that can be levied (income tax, VAT, customs, excise, etc.).
- Art. 210: No tax or licensing fee can be imposed except as authorized by legislation.
- Art. 210(1): Taxes must be fair, equitable, and based on ability to pay.
- Art. 210(2): Provides for tax exemptions, particularly for public interest.
- Art. 225 & 226: Oversight on use of public funds and audit by the Auditor General.
Examples of tax laws in Kenya:
- Income Tax Act (for personal, corporate, and capital gains taxes)
- VAT Act of 2013
- Excise Duty Act of 2015
- East African Community Customs Management Act of 2004
- Tax Procedures Act of 2015
Each year, the Kenyan Parliament passes a Finance Act, which can be used to amend existing tax laws, introduce new taxes or incentives, implements the government´s fiscal policy, and more. It is for instance commonly used to change tax rates, thresholds, and exemption rules.
This article was last updated on: December 5, 2025