Tax Implications of Sending Money to Kenya

Money transfers to Kenya aren't typically taxable, but there are reporting requirements and situations to understand. Here's what you need to know.

General Principle

Key point: Sending money to family in Kenya is generally NOT taxable as income—for you or your recipient.

However:

• Certain thresholds trigger reporting
• Gift tax rules may apply (rarely)
• Kenya has its own considerations

For US Senders

No Tax on Transfers Themselves

Sending money abroad is not a taxable event. You're simply moving your after-tax money.

FinCEN Reporting ($10,000+)

What happens:

• Transfers over $10,000 are reported to FinCEN
• This is automatic by the provider
• It's informational, not a tax

Your action: None required. This is routine compliance.

Gift Tax Considerations

Annual gift exclusion (2024): $18,000 per recipient

What this means:

• Gifts under $18,000/year per recipient: No reporting needed
• Gifts over $18,000/year per recipient: File Form 709

Important: Filing Form 709 doesn't mean you owe tax. It just uses up lifetime exemption ($12.92 million).

Practical reality: Most diaspora send less than $18,000/year to any single person.

FBAR Reporting

If you have foreign financial accounts over $10,000 total:

• File FBAR (FinCEN Form 114)
• Due April 15 (extended to October)
• Includes Kenya bank accounts in your name

Just sending money? No FBAR needed unless you have Kenya accounts.

FATCA Requirements

If you have foreign financial assets over certain thresholds:

• File Form 8938 with tax return
• Thresholds: $50,000+ (single, US resident) to $400,000+ (married abroad)

Most diaspora sending remittances: Not applicable.

For UK Senders

No Tax on Transfers

Like the US, sending money from the UK isn't taxable.

No Gift Tax

The UK has no gift tax during your lifetime.

However:

• Inheritance tax may apply if you die within 7 years of gift
• Only relevant for large amounts
• £3,000 annual exemption always applies

Practical Reality

Most UK diaspora sending regular remittances:

• No tax obligations
• No reporting required
• Just keep records for your own benefit

For Canada Senders

No Tax on Transfers

Sending money abroad isn't taxed in Canada.

No Gift Tax

Canada has no gift tax.

Reporting Large Amounts

Transfers over $10,000 CAD:

• Reported by financial institution
• Routine compliance
• No action from you

For Kenya Recipients

Remittances Are Not Taxed

Kenya does not tax incoming remittances.

Your family doesn't owe tax on money you send them.

What Might Be Taxed

If the money is used to generate income:

• Investment returns (if invested)
• Rental income (if buying property)
• Business profits (if used for business)

The remittance itself isn't taxed—what it's used for might be.

Large Amounts

Very large amounts may attract attention from KRA:

• Be prepared to explain source
• Keep transfer records
• Legitimate remittances are fine

Record Keeping

Why Keep Records

Even without tax implications:

• Proves source of funds if questioned
• Helps with future large transactions
• Good financial practice
• May be needed for visa/immigration

What to Keep

• Transfer receipts
• Exchange rates used
• Dates and amounts
• Recipient information
• Purpose notes

How Long to Keep

• US: 7 years recommended
• UK: 6 years
• Canada: 6 years
• Kenya: Indefinitely for major transactions

Special Situations

Supporting Dependents

If you claim Kenya family as dependents (rare):

• Different tax implications
• Consult tax advisor
• Documentation required

Property Purchase

Sending money for Kenya property:

• Transfer itself not taxed
• Property may have taxes in Kenya
• Stamp duty: 4% of value
• Future sale: Capital gains tax

Business Investment

Investing in Kenya business:

• Transfer not taxed
• Business profits taxed in Kenya
• May have implications in your country
• Consult advisor for structure

Inheritance

If you're sending inheritance funds:

• Varies by country
• May have estate tax implications
• Get professional advice for large amounts

Common Questions

Do I need to report money I send to my parents?

US: Only if over $18,000/year per parent (Form 709)

UK: No

Canada: No

For typical amounts, no reporting needed.

Will my recipient pay tax?

No. Remittances aren't taxed in Kenya.

Do transfers affect my tax return?

Not directly. They're not deductible and don't increase tax.

What if I send large amounts for property?

The transfer isn't taxed. Keep documentation for Kenya property transactions.

Can I deduct remittances?

No. Supporting family abroad isn't tax-deductible.

Professional Advice

When to Consult a Tax Advisor

• Sending over $50,000/year
• Property purchases
• Business investments
• Complex family situations
• Inheritance matters

How to Find Help

• CPA/accountant with international experience
• Tax attorneys for complex matters
• Diaspora community recommendations

Conclusion

For most diaspora sending money to Kenya:

1. No tax on transfers - It's your money, you're just moving it
2. Reporting is routine - Providers handle large transaction reporting
3. Gift tax rarely applies - Thresholds are high
4. Recipients don't pay tax - Remittances aren't income in Kenya
5. Keep records anyway - Good practice for any large transactions

Focus on finding the best transfer rates rather than worrying about taxes.

Compare transfer options on our money transfer page.