Complete Tax Guide for Ride-Hailing Drivers in Kenya 2024

I used to think taxes were a problem for other people.

Seriously. For the first few years I was driving, the word "KRA" was just something I heard on the news. It was for people with payslips, office jobs, and formal businesses. Me? I was a hustler, part of the informal economy. My business happened on the road, my income came in through my phone, and my expenses were paid in cash or M-Pesa.

The idea of filing a tax return seemed as relevant to me as filling out a flight plan. I was driving a car, not a 747.

Then, a couple of years ago, I was talking to an accountant friend. He was telling me how the KRA was getting smarter, how they were investing in technology to get a better view of the digital economy. He mentioned something called "Digital Service Tax" and how the government was looking closely at businesses that operate through apps.

That conversation was a wake-up call. The world was changing, and the old lines between "formal" and "informal" were blurring. I realized that ignoring the KRA wasn't a long-term strategy. It was a gamble. And I wasn't willing to gamble with my family's future.

The Taxman is Coming to the Gig Economy. Here's Why It's a Good Thing.

Let's be direct. The idea of paying taxes can be scary. It feels like you're just giving away your hard-earned money.

But I want you to change your mindset. For us in the ride-hailing business, engaging with the KRA is the single most important step we can take to transform our hustle into a legitimate, sustainable business.

Why? Because once you are in the system, you stop just paying tax. You start managing it. You unlock the power of business deductions—the ability to tell the KRA about all your expenses so that you are only taxed on your profit, not your total earnings.

The government is no longer blind to our industry. The introduction of the Digital Service Tax (DST), and its planned evolution into a Significant Economic Presence (SEP) Tax, is clear proof that they are building a framework for the digital economy. The choice is simple: get ahead of the curve and professionalize, or wait and face penalties later.

Your 3-Step Journey to Becoming Tax Compliant

Getting started is simpler than you think. You don't need to be an accountant. You just need to be organized.

Step 1: Get Your KRA PIN

The Personal Identification Number (PIN) is your key to the entire system. If you don't have one, you must get one. It's free and you can register for it online on the KRA iTax portal. This is your official identity as a taxpayer.

Step 2: File Your Returns Every Year (Even if it's Zero!)

This is the part that trips most people up. Every person with a KRA PIN is required by law to file a tax return for the previous year's earnings, and the deadline is always June 30th.

• If you had no other income outside of driving: You still need to file. If your business didn't make a taxable profit after expenses, you can file a "Nil Return." This tells the KRA that you are compliant, even if you don't owe any tax for the year.
• Why this is critical: Failing to file a return, even a nil return, results in an automatic penalty. It's an easy penalty to avoid.

Step 3: Understand the Tax That Applies to You

As a driver on a digital platform like Uber or Bolt, your income falls under the digital economy. The primary tax to be aware of is the Digital Service Tax (DST). Currently, this is paid by the platform (Uber, Bolt) to the KRA. However, for you as a resident individual, this is treated as an advance tax. When you file your annual return, you will declare your total income and expenses, and the DST paid by the platforms can be offset against your final tax bill.

The most important thing is to declare your income honestly.

The Secret Weapon: Claiming Your Business Expenses

This is where you turn tax compliance from a burden into an advantage.

As a self-employed business owner, you are allowed to deduct all "wholly and exclusively" incurred business expenses from your gross income. This reduces your taxable income, and therefore, the amount of tax you have to pay.

Your car is an office, a machine, and a tool all in one. Almost everything you spend on it is a potential tax deduction.

Your Ultimate List of Tax-Deductible Expenses:

• Fuel: Every single litre. This is your biggest expense and your biggest deduction.
• Vehicle Maintenance & Repairs: Oil changes, new tyres, engine work, puncture repairs—it's all deductible.
• Car Insurance: Your annual premium is a business expense.
• Vehicle Licensing & Inspection Fees: All your NTSA fees are deductible.
• Airtime & Data Bundles: You need your phone to work. Your data is a business tool.
• Car Washes: Keeping your vehicle clean is a necessary business expense.
• Parking Fees: Every shilling you spend on parking while waiting for rides is deductible.
• Bank Fees & Loan Interest: The interest you pay on your car loan and the fees on your business bank account are deductible.
• Phone Accessories: Your car charger, phone mount, and Bluetooth earpiece are all essential business tools.
• Personal Relief: Every resident taxpayer in Kenya gets an automatic personal relief of KSh 28,800 per year.

Think about that. If you spend KSh 200,000 on fuel and KSh 50,000 on maintenance in a year, that's KSh 250,000 you can deduct from your income. This is the power of being a formal business.

RiderPal: Your Tax Compliance Partner

How can you possibly keep track of all these expenses? A shoebox full of faded receipts? A messy notebook?

This is where technology becomes your best friend.

RiderPal is not just an app for tracking profit; it is the most powerful tool you can have for preparing your taxes.

• Log Every Expense, Instantly: Every time you pay for fuel, a car wash, or airtime, log it in RiderPal in seconds. Don't wait until the end of the week. Do it immediately.
• Categorize for Clarity: The app automatically helps you categorize your spending. At the end of the year, you won't have a messy pile of receipts. You will have a clean, organized report showing exactly how much you spent on "Fuel," "Maintenance," "Communications," and more.
• Your Annual Report, Ready to Go: When it's time to file your returns, you can use RiderPal's reports to get a clear summary of your total income and your total deductible expenses for the year. The app does the hard work of organizing for you.

You cannot claim a deduction for an expense you can't prove. Meticulous record-keeping is the key, and RiderPal makes it effortless.

The Final Word: From Hustler to Business Owner

For years, we've operated in the grey area. The informal sector.

But that grey area is shrinking.

The future of our industry is professional. It's digital. And it's formal. Embracing tax compliance is not about losing money. It's about gaining legitimacy. It's about being able to walk into a bank with a clean tax record and apply for a loan for a new car. It's about building a business that is sustainable, respectable, and secure.

Stop thinking of tax as a punishment.

Start seeing it as the price of admission to the formal business world—a world where you have rights, legitimacy, and the power to build real, lasting wealth.

Ready to professionalize your business? Download RiderPal today to start meticulously tracking your income and expenses, and take the first step towards becoming a fully compliant and financially powerful business owner.