The Finance Act, 2026 introduced a specific tax treatment for certain non-resident employees working for a resident air transport operator designated as a national carrier.
This amendment was not contained in the Finance Bill, 2026. It was introduced in the Finance Act.
What Does the New Rule Say?
Income earned by a non-resident individual employed by, or engaged on behalf of, a resident air transport operator designated as a national carrier will not be treated as accruing in or being derived from Kenya to the extent that:
- The income relates to duties performed outside Kenya; and
- Those duties are connected to the operator’s international transport operations.
What Does This Mean for Kenya Airways?
The rule creates an exception to the general taxation of employment income paid by a Kenyan employer to a non-resident employee.
Therefore, where a qualifying non-resident employee performs duties outside Kenya in connection with international transport operations:
- The portion relating to duties performed outside Kenya may fall outside Kenyan taxation.
- The portion relating to duties performed in Kenya remains subject to the applicable Kenyan tax rules.
Simple Example
Suppose a qualifying non-resident employee earns KES 10,000,000 and:
🔹 40% relates to duties performed in Kenya
🔹 60% relates to qualifying duties performed outside Kenya in connection with international transport operations
The 60% relating to qualifying duties outside Kenya would not be treated as income accruing in or derived from Kenya under this specific provision.
The 40% relating to duties performed in Kenya remains within the Kenyan tax framework.
Key Takeaway
This amendment does not mean that all Kenya Airways employees are exempt from Kenyan income tax.
It specifically applies to non-resident individuals working for a resident air transport operator designated as a national carrier, and only to qualifying income relating to duties performed outside Kenya and connected to international transport operations.
TAX HOME KENYA LIMITED
Simplifying Your Tax Journey.
📱 WhatsApp/Call: +254 725 416 982
📧 taxhomekenyalimited24@outlook.com
Follow us: @taxhomekenya