The Kenya Revenue Authority (KRA), under the Income Tax Act (Cap 470), is allowed to tax Kenyan authors on the sales income they make on Amazon through Kindle Direct Publishing (KDP).
According to the authority, Kenyan authors can be taxed up to 40% of the total Amazon book sales in compliance with the Kenyan tax obligations.
The Tax Authority clarifies that Kenyan residents must declare their worldwide income, including royalties from platforms such as Amazon, which are taxable if earned in Kenya.
Additionally, the Authority argues that Amazon royalties under the Income Tax Act are payments for the use of copyright in literary, artistic, or scientific works published on KDP, with the withholding tax rate set at 5% for residents and 20% for non-residents.
“Kenya Revenue Authority wishes to bring to the notice of the public that they ought to withhold tax when making payment for royalties with a withholding tax rate of 5% for residents and 20% for non-residents,” KRA directs.
Despite the KRA setting a withholding tax on foreign royalties, Amazon, being a foreign platform without a Kenyan presence, makes direct payment; withholding tax deduction is not automatic.
However, self-published eBooks, paperbacks, and hardcovers on Amazon through Kindle Direct Publishing are subject to tax on the worldwide income, including royalties from Amazon for Kenyan authors.
Kenya authors perform self-assessment and declare the complete gross royalties or net after the US withholding tax as their income for KRA tax deductions.
Also Read: KRA eTIMS Guide: How Taxpayers Register Items and Generate Receipts
Declaring and Paying KRA Tax on Amazon Royalties
For Kenyan authors to make tax payments, one must present detailed records of all the KDP sales reports, payment statements, and a US withholding form.
Additional authors are required to provide their bank statements and expense records.
Annual individual returns are filed through iTax by the 30th June for the previous year, including the foreign royalties under self-employment or professional income on Amazon KDP.
Also Read: KRA Extends Working Hours For Kenyans to File Returns Ahead of Deadline
Double Tax Relief For Kenyan Authors
In cases of double taxation relief, the Kenyan tax system offers unilateral relief under Section 16(2)(c) of the Income Tax Act or via Double Tax Agreements (DTAs) where available.
However, Kenya does not offer a full DTA, as the US withholds 30% on US-sourced royalties from Amazon sales.
KRA has advised that, the declare taxes, Kenyan authors are required to report legitimate business expenses, including those incurred for editing, cover design, Amazon Ads, formatting tools, internet costs, and research materials, and must provide receipts and invoices.
Payments after the tax deduction are made to the authors, with Amazon paying royalties 60 days after the monthly threshold is met.
Kenyan authors receive funds through Kenyan banks, Wise, Payoneer, or similar services, and any currency conversion gains or losses may have tax implications.
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