If you’re a Kenyan entrepreneur working with clients outside the country, congratulations – you’re already playing on a global stage. Whether you’re freelancing, running a digital agency, exporting goods/services, or consulting remotely, international clients usually mean better-paying opportunities and exposure to larger markets.
As of early 2026, Kenya’s digital economy is projected to contribute a staggering 9.24% to the national GDP. We are no longer just a Silicon Savannah in name; with an estimated 1.9 million Kenyans now engaged in digital jobs and gig work), the dream of earning in Dollars, Euros, or Pounds while sitting in a cafe in Westlands or a home office in Eldoret is a reality.
But as the saying goes: “Large figures come with large responsibilities.”
Once money starts coming in from abroad, things that never mattered locally – foreign currencies, transfer fees, tax treatment, and compliance – suddenly become very real. Many entrepreneurs only realize this when payments are delayed, fees eat into profit margins, or tax questions start creeping up.
The truth is simple: payments, accounting, and taxes are deeply connected. If one is handled casually, the others usually unravel.
This guide is meant to help Kenyan entrepreneurs understand the system as a whole without drowning you in financial jargon.
Who Counts as an International Client or Overseas Buyer?
An international client is any customer who is based outside Kenya and pays you from abroad.
This includes:
- Foreign companies paying you for professional services
- Overseas individuals or companies hiring you remotely
- Buyers purchasing goods you export outside Kenya
This distinction matters because services and goods are treated differently in accounting and taxation.
If you provide services, your main focus is usually on contracts, invoices, and proof of payment.
If you export goods, you also deal with the same issues, but on top of that have to consider inventory, shipping costs, customs documentation, and foreign exchange exposure per shipment.
The complexity starts because money doesn’t move the same way across borders as it does locally. Different countries have different banking rules, compliance checks, and currency controls. On top of that, payment platforms add their own layers of fees, verification, and settlement timelines.
What looks like a simple “send invoice, get paid” process often turns into delayed payments, unexpected deductions, exchange losses, and tax uncertainty. Understanding how money moves internationally is the first step to avoiding these issues.
What Are the Best Ways for Kenyan Entrepreneurs to Receive Cross-Border Payments?
There’s no single best method. The right option depends on your business model, client location, transaction size, and whether you prioritize speed or cost.
Global payment platforms commonly used in Kenya
Many service providers rely on platforms built specifically for cross-border transactions. This is often the easiest option for getting started, but convenience often comes with fees, exchange rate markups, and accounting complexity.
- PayPal was the default for most freelancers because it started first, and for the longest time was the most convenient way to receive payments. On top of that, it is widely used, and easily integrates with Mpesa. However, their anti-money-laundering policies often result in freezing of funds (sometimes up to 6 months or longer for new accounts) for withdrawal especially for large transactions, which has turned many entrepreneurs away from the platform.
- Wise is popular with entrepreneurs who invoice in USD, EUR, or GBP. It offers transparent fees and exchange rates close to the real market rate. It’s especially useful if you want to hold foreign currency and convert only when rates are favorable.
- Payoneer works well for freelancers, agencies, and businesses paid by overseas companies or marketplaces. It provides receiving accounts in multiple currencies and relatively predictable fees, though withdrawals can still take a few days.
For exporters of goods, bank transfers tied to shipping documents are more common, especially when dealing with distributors or wholesalers abroad.
Can You Use Local Options for International Payments?
In some cases, yes.
Direct international bank wire transfers to Kenyan accounts are still common for larger payments. They are reliable but slow, and fees are often split between sending and receiving banks, making the final amount unpredictable.
Mobile money has also entered the conversation. Mpesa has partnerships that allow some international transfers, but this is usually better suited for smaller amounts rather than regular business income.
The key takeaway is that convenience for the client matters. If it’s difficult for them to pay you, delays and disputes are more likely, no matter how good your service is.
How Do Currency Exchange Rates and Fees Affect Your Bottom Line?
This is where many entrepreneurs quietly lose money.
The rate you invoice at is rarely the rate you receive. Between the time you send an invoice and the time money hits your account, exchange rates may move.
Moreover, every cross-border payment usually involves:
- A transaction fee
- A currency conversion fee
- An exchange rate markup by the bank/payment platform.
Even small percentages add up over time. A 3–5% loss on every payment can mean thousands of shillings gone each month, especially if you’re paid frequently. One simple way to reduce the impact of currency conversions on your bottom line is invoicing in a stable foreign currency like USD or EUR and choosing when to convert to KES.
From an accounting perspective, these differences are recorded as foreign exchange gains or losses. From a business perspective, they affect your real profit.
As foreign income grows, opening a foreign currency account becomes practical. You should also consider using a reputable forex bureau as their exchange rate markups are usually significantly lower than what banks take.
| Option | Best For | Pros | Cons |
| Local Bank (KES Account) | Occasional foreign payments, small volumes | Simple, familiar, easy compliance | Poor exchange rates, hidden FX markups, forced conversion |
| Foreign Currency Account (FCA) | Regular international income | Hold USD/EUR/GBP, control timing of conversion, clearer accounting | Bank fees vary, still not the best FX rates |
| Licensed Forex Bureau | Large or frequent conversions | Better rates, lower spreads, negotiable for volume | Requires discipline |
But what matters most isn’t just how you get paid but how you record it.
How Should You Record Cross-Border Payments in Your Accounts?
This is where many entrepreneurs make costly mistakes.
As a bare minimum, your accounting records should show:
- The full amount your client paid (gross income)
- The fees deducted by payment platforms or banks
- The exchange rate used
- The final amount received in Kenyan shillings
Stronger accounting systems also:
- Separate local and international income
- Track revenue by currency
- Match invoices to payments
- Clearly show fees, taxes, and FX differences
Imagine if a client pays you USD 5,000 and you receive KES after deductions, your income is still the full USD 5,000. The fees are business expenses, not a reduction of revenue. Failing to record this properly leads to understated income, confusing profit figures and problems during tax assessments.
For exporters, this becomes even more important. Each shipment should be accounted for separately, including product cost, freight, insurance, duties, and foreign exchange differences.
Is Income From Foreign Clients Taxable in Kenya?
In short: yes.
Kenya operates on a worldwide income principlefor tax residents. If you’re based in Kenya and manage your business from here, foreign income is generally subject to Kenyan tax regardless of where the client is located.
What differs is how it’s reported, the expenses you can deduct, and whether other taxes like VAT or withholding tax come into play.
This is why accurate accounting records matter. Tax is calculated from your books. If your records are unclear, your tax position becomes harder to defend.
Which Taxes Should You Pay Attention To?
You don’t need to master every tax. A few key ones matter most.
Income tax
Foreign income is added to your total business income and taxed according to your structure: sole proprietor, partnership, or company. It’s treated the same way as local income when it comes to filing returns.
If you’re registered under turnover tax, monthly tax, or corporate tax, foreign earnings don’t get a special exemption just because they came from outside Kenya.
VAT on exported services
This is an area that causes a lot of confusion.
Many services provided to clients outside Kenya qualify as exported services, which are often zero-rated for VAT. Zero-rated doesn’t mean ignored. You still declare the income, but VAT charged is at 0%. Since the VAT is zero-rated, you also can claim input VAT on this income.
For more information about how VAT works, read our in-depth article on VAT Regulations in Kenya.
Not all services qualify automatically. The nature of the service and where it’s consumed matter. This is why proper invoicing and documentation are important, even when no VAT is charged.
What About VAT on Exported Goods?
For exporters of physical products, VAT treatment is more structured.
Exported goods are generally zero-rated for VAT, provided you have proper documentation. This includes:
- Export entries
- Commercial invoices
- Shipping and customs documents
Without these, the zero-rating can be disallowed, even if the goods left the country.
Exporters also need to track input VAT carefully. Many fail to recover VAT simply because their records don’t clearly link expenses to export activity.
Withholding tax
Withholding tax mainly applies when you pay non-residents for certain services, not when you receive payment from abroad.
However, complications arise when:
- You subcontract foreign service providers
- You pay overseas consultants, designers, or developers
- You share revenue with offshore partners
These transactions should be reviewed carefully, especially for growing businesses.
READ ON: Everything You Should Know about SME Taxation in Kenya
How Should You Invoice International Clients from Kenya?
An invoice is more than a payment request. It’s a legal and accounting document.
For international clients, your invoice should clearly show:
- Seller and buyer details
- Invoice date and unique number
- Description of services or goods
- Currency used
- Payment terms
- VAT treatment (including zero-rating where applicable)
Exporters should also reference shipment details and, where relevant, ICC Incoterms. This links your sales records to customs and logistics documentation.
Well-structured invoices simplify accounting and protect you during tax reviews.
What Common Mistakes Do Kenyan Entrepreneurs Make With Cross-Border Payments?
Most problems don’t come from bad intentions. They come from small oversights that compound over time.
- Treating foreign income as informal. Some entrepreneurs assume that if money comes in through an online platform or a foreign bank, it doesn’t need the same level of reporting. That assumption usually collapses during a tax review.
- Mixing personal and business finances. Mixing accounts makes it hard to track true income, expenses, and foreign exchange differences. For exporters, this often leads to underestimating costs and overstating profits.
- Under-declaring income because it arrives in bits and pieces. Multiple small payments can feel insignificant until they add up to a sizable annual figure.
- Some entrepreneurs also assume that if tax wasn’t deducted abroad, then nothing is owed locally. That assumption is risky. Others go the opposite direction and assume they’re being taxed twice, when in reality there may be ways to offset or document foreign deductions.
- Late or inaccurate tax filings also catch up with growing businesses. Many people wait until a bank, platform, or authority raises questions before they take compliance seriously. As foreign income increases, delays attract attention from regulators, especially when transaction volumes rise suddenly.
- Inventory and cost tracking is another weak point. Exporters sometimes focus only on the sale price and ignore freight, insurance, port charges, and currency movements. On paper, the deal looks profitable but in reality, this makes margins much thinner.
Final Thoughts: How Do You Scale Globally While Staying Compliant in Kenya?
Working with international clients is no longer unusual for Kenyan entrepreneurs as it’s slowly becoming the norm.
The winners are not just those who land international clients or buyers, but those who build strong foundations beneath the income—clean accounting, proper documentation, and clear tax positions.
Handled well, global payments become predictable. Taxes stop being scary. Growth becomes sustainable.
Handled casually, the same opportunities turn into stress, penalties, and missed profits.
Need Help Getting Your International Payments Right?
As your international income grows, getting payments, foreign exchange, accounting, and taxes aligned becomes critical.
Alphacapworks with Kenyan entrepreneurs, exporters, and service businesses handling cross-border transactions. With hands-on experience in foreign currency accounting, international income reporting, and tax compliance, Alphacap helps you scale globally with confidence.
If you’re earning from abroad and want clarity, structure, and peace of mind, a knowledgeable accounting partner makes all the difference. Contact us today.