Invoicing an Agency as a Referral Partner in Nairobi: VAT, Withholding and Best Practice in 2026

The verdict in three sentences

A compliant invoice is what separates a referral partner paid in 30 days from one chasing money. In Nairobi, VAT is 16% and a 5% withholding tax (WHT) applies to commission payments. Mastering mandatory fields, thresholds and record-keeping avoids rejections and tax adjustments.

The mandatory fields of a referral invoice

A referral commission is a service supply: you invoice it, not just "receive" it. An incomplete invoice is the number-one cause of late payment. Here are the essentials in 2026.

VAT, withholding tax and net received

In Kenya, VAT registration is required above a turnover threshold (KES 5M/yr); below it you generally invoice without VAT. Above it, 16% VAT is added to the net. On commissions, clients often apply a 5% withholding tax remitted to the KRA: it reduces your immediate net but counts as a credit against your own tax.

Example in Nairobi: a 200,000 FCFA net commission. If VAT-registered, the invoice shows 200,000 + 32,000 (16% VAT) = 232,000 FCFA gross. The client withholds 5% and pays you the balance, remitting VAT and WHT to the KRA.

The Kolonell referral partner program

Under Kolonell's referral (apporteur d'affaires) program, you issue one invoice per signed deal. 2026 scale: showcase 15% + 5% recurring, e-commerce 12%, marketplace 10%, institutional 8%. Kolonell provides an invoice template with every mandatory field, sharply cutting rejection causes. An 8% institutional commission on a Premium project at 10,000,000 FCFA is 800,000 FCFA to invoice cleanly.

Mini case study

Grace, a referral partner in Nairobi, invoices a 12% e-commerce commission on a Growth project at 2,000,000 FCFA, i.e. 240,000 FCFA net. VAT-registered, she invoices 240,000 + 38,400 (16%) = 278,400 FCFA gross. The client applies 5% WHT (12,000 FCFA), remitted to the KRA and creditable against Grace's tax. Immediate net: about 266,400 FCFA, with VAT remitted afterwards. With a clear ledger, Grace reclaims the WHT as a tax credit.

FAQ

Should I invoice with or without VAT? It depends on the registration threshold: below the floor turnover (KES 5M/yr in Kenya) you generally invoice without VAT; above it, 16% VAT is mandatory.

What is withholding tax on my commissions? It is a fraction the client pays directly to the tax office instead of to you. It reduces your immediate receipt but is credited against your annual tax.

Why does an invoice get rejected? Common causes: missing number, absent tax ID, wrong VAT, vague description or incorrect payment details. A complete template removes 90% of rejections.

How long should I keep invoices? Keep invoices and receipts for several years (order of magnitude 5-7 years): they are your proof in an audit and the basis for deductible expenses.

What payment term should I negotiate? The standard is 30 days; always state a due date so you can follow up and, if agreed, apply late-payment penalties.

Let's talk about your project. Use the Kolonell invoice template and collect your referral commissions with no rejection or delay. WhatsApp +221 77 596 93 33.