taxation of uber taxi drivers in Kenya
How are Uber and Taxi Drivers Taxed in Kenya in 2025 - Full Guide
Many taxi and ride-hailing drivers are waking up to a new reality. That hailing apps like Uber, Bolt, and Little Cab are now sharing drivers’ every trip earning directly with KRA.
For some, this is a shock. But is the new normal. More and more apps are integrating their systems with KRA.
Many drivers believe that they do not need to pay income tax on what they earn. Others have even been filing nil returns despite making daily income. But starting in 2026 and beyond, we can expect to see more data driven KRA audits, penalties, and disputes targeting drivers who fail to comply.
If you drive for a taxi or ride-hailing app, this guide will show you exactly how you are taxed, the choices available, and how to plan ahead to legally reduce tax and avoid penalties.
Why Tax Compliance Matters for Drivers
Driving is not just about traffic, fuel prices, or navigating Nairobi’s busy streets. Like any other small business, it also involves managing your finances and staying compliant with tax laws.
The Kenya Revenue Authority (KRA) classifies ride-hailing and taxi drivers as sole proprietors. That means you are running your own business, and the money you earn from passengers is taxable.
Your Main Tax categories as a driver in Kenya
As a driver, your income can be taxed under two main income tax categories:
1. Turnover Tax (TOT)
Applies if your annual gross income is between Ksh 1 million and Ksh 25 million.
You pay 1.5% of your monthly income (before expenses).
Filing and payment are due by the 20th of the following month.
You can even pay daily as you go.
Example: If you earn Ksh 10,000 today, you pay 1.5% × 10,000 = Ksh 150.
In a 30-day month, that totals Ksh 4,500.
Note: TOT does not allow expense deductions.
2. Ordinary Income Tax
Applies if your income is above Ksh 25 million annually, or if you choose to opt out of TOT.
Tax is charged on net profit (income minus allowable expenses).
Filing is annual (by 30 June of the next year).
Tax is charged using progressive rates:
On the first Ksh 288,000 →10%
On the next Ksh 100,000 →25%
On the next Ksh 5,612,000 →30%
On the next Ksh 3,600,000 →32.5%
On all income above Ksh 9,600,000 →35%
Tip: Keep all receipts and records to justify deductions in case of a KRA audit.
3. Housing Levy (New Rule)
This has caused confusion among drivers. Many assume it applies only to salaried employees, but it also applies to self-employed persons. Recently, when I was doing tax education for drivers of a major ride-hailing app, many were surprised to learn they are required to pay the housing levy even though they are not employed.
You must pay 1.5% of your total monthly income.
Payment deadline: 9th of the following month.
Example: If you earned Ksh 10,000 last month, you must pay Ksh 150 in housing levy.
Key point: Housing levy applies regardless of whether you choose TOT or ordinary income tax.
Turnover Tax (TOT) vs. Ordinary Income Tax: Which is Better for Drivers?
Worked-Out Example: TOT Vs. Ordinary Income Tax (Including Housing Levy)
Let’s assume two drivers each earn Ksh 50,000 per month (Ksh 600,000 annually).
Case 1: Kadere A on Turnover Tax (TOT)
Gross monthly income = Ksh 50,000
TOT = 50,000 × 1.5% = Ksh 750 per month → 9,000 per year
Housing Levy = 50,000 × 1.5% = Ksh 750 per month → 9,000 per year
Total tax + levy = 18,000 per year
Very simple to calculate. But you cannot deduct any expenses.
Case 2: Kadere B on Ordinary Income Tax
Gross annual income → 50,000 x 12 = Ksh 600,000
Expenses:
Fuel = 180,000
Car rent = 120,000
Platform commissions = 60,000
Insurance, servicing & others = 40,000
Total expenses = 400,000
Net taxable profit = 600,000 – 400,000 = 200,000
Income Tax = zero (income below 228,000 is not taxed)
Housing Levy = 600,000 × 1.5% = 9,000
Total tax + levy = 9,000 per year
You can reduce taxable income if expenses are high. But there is more paperwork, you must keep receipts and records.
Key Takeaway:
Always run the numbers before choosing between TOT and Ordinary Income Tax. Picking blindly can cost you more than you think.
If you’re unsure, ask a tax professional to guide you. Or better yet, do it yourself with our easy-to-use, expertly prepared Excel template, built specifically for Uber and taxi drivers in Kenya.
👉 Download our Tax Comparison Template for drivers here
How To Reduce Your Tax As A Driver in kenya
If you choose the ordinary income tax option, you can reduce your tax by deducting business expenses. These are costs that are “wholly and exclusively” for the purpose of generating business income.
Deductible Expenses Include:
Car Hire or Lease Payments - Fully deductible if you rent the vehicle.
Fuel and Oil – Keep every receipt.
Maintenance and Repairs – Service, tires, garage bills.
Insurance Premiums – Fully deductible.
Depreciation (Wear and Tear Allowance) – Deduct 25% of your car’s value each year on a reducing balance.
Example: If you buy a car for Ksh 1.5 million, you can deduct Ksh 375,000 in year one.
Platform Commissions & Fees – Uber, Bolt, or Little Cab deductions.
Car Loan Interest – Only the interest portion, not the principal.
Phone & Internet – If used for business.
Car Wash & Cleaning – Keeping your car clean for customers.
Under TOT, deductions are not allowed. So, if your costs are high, ordinary income tax may actually save you more money.
The Importance Of Record-Keeping
Good record-keeping is the foundation of compliance. Without proof, KRA will reject your expenses.
For TOT - Keep accurate monthly records of your income. Ride-hailing apps provide statements that are usually enough.
For Ordinary Income Tax - Keep receipts for fuel, repairs, insurance, car wash, and loan interest. Always ask for ETR receipts at petrol stations, garages, and car washes.
Best practice: Maintain a digital or physical file of all receipts and app statements.
Penalties For Non-Compliance
KRA has simplified filing via iTax, but missing deadlines is costly:
Late filing: Ksh 2,000 or 5% of the tax due (whichever is higher).
Late payment: 5% penalty plus 1% interest per month until cleared.
Checklist: 3 Things Every taxi Driver Must Do To Stay tax Compliant
Choose the right tax regime – TOT or ordinary income tax depending on your expenses.
Keep meticulous records – fuel, car hire, repairs, commissions, and receipts.
Pay taxes and housing levy on time – avoid penalties and interest.
Conclusion
Tax laws in Kenya are changing fast, especially for the digital economy. Apps are now reporting your income to KRA, meaning hiding is no longer an option.
By understanding your tax obligations, keeping proper records, and using smart deductions, you can:
✅ Stay compliant with KRA
✅ Reduce your tax legally
✅ Build a stronger, more profitable driving business
FAQs for Uber and Taxi Driver Taxes in Kenya
1. Do Uber drivers in Kenya pay income tax?
Yes. Uber drivers, Bolt drivers, and other ride-hailing drivers are classified as self-employed sole proprietors by KRA. All income earned from ride-hailing apps is taxable, and drivers must file either Turnover Tax (TOT) or ordinary income tax returns.
2. What is the difference between TOT and ordinary income tax for drivers?
Turnover Tax (TOT) is a flat 1.5% tax on gross income for drivers earning between Ksh 1 million and Ksh 25 million annually. It’s simple but doesn’t allow deductions.
Ordinary income tax is based on net profit (income minus expenses) and is charged progressively. It’s suitable for drivers with higher expenses because they can deduct costs like fuel, car rent, insurance, and platform commissions.
3. Do taxi drivers have to pay housing levy in Kenya?
Yes. All taxi and ride-hailing drivers must pay a housing levy of 1.5% of monthly income, even if they are not salaried employees. Payment is due by the 9th of the following month, and this applies regardless of whether the driver is on TOT or ordinary income tax.
4. Which tax regime saves Uber drivers more money?
It depends on expenses:
TOT is cheaper and simpler for drivers with low expenses, because it’s a flat 1.5% on gross income.
Ordinary income tax may save more money for drivers with high business expenses, as they can reduce taxable income by claiming deductions for fuel, car rent, insurance, and other costs. Choosing the right regime requires reviewing your monthly and annual expenses.
Written by CPA Joseph Wachira
The author is a Tax Director at ClearTax Consultancy & is reachable via wachira@cleartax.co.ke