The verdict in three sentences
Referral commissions are taxable income: failing to declare them exposes you to an assessment with penalties. In Kenya, a sole proprietor can use the turnover tax while turnover stays under the small-business threshold, replacing several taxes with a simplified levy. Survival rule: set aside 15 to 30 % of every commission for tax the moment it lands, and you will never be caught short.
What taxes hit a referral agent?
A referral agent operating as a sole proprietor is taxed on profit under income tax. Depending on turnover, they fall either under the turnover tax (a single simplified regime) or the standard regime (with VAT charged). The turnover tax is designed for small businesses and bundles the main obligations into a single payment.
| Regime | Indicative annual turnover | What it covers | VAT to charge |
|---|---|---|---|
| Turnover tax | Under small-biz threshold | Simplified single levy | No separate VAT |
| Standard (small) | Above the threshold | Income tax + separate VAT | Yes, standard rate |
| Standard (full) | Large turnover | Full accounting | Yes, standard rate |
The tax-provision rule
The classic mistake of a starting agent: spend 100 % of commissions, then panic at the tax deadline. Discipline means setting aside part of every commission on receipt. A range of 15 to 30 % covers most situations under the turnover tax or standard regime.
| Commission received | 20 % provision | Net to keep |
|---|---|---|
| 75,000 FCFA | 15,000 FCFA | 60,000 FCFA |
| 144,000 FCFA | 28,800 FCFA | 115,200 FCFA |
| 240,000 FCFA | 48,000 FCFA | 192,000 FCFA |
| 400,000 FCFA | 80,000 FCFA | 320,000 FCFA |
| 3,600,000 FCFA | 720,000 FCFA | 2,880,000 FCFA |
Mini case study
Fatou, 34, a marketing consultant, collects the equivalent of 3,600,000 FCFA in Kolonell commissions over 2026 (a mix of showcase at 15 % and e-commerce at 12 %). Her turnover stays under the small-business threshold, so she uses the turnover tax. By provisioning 20 % on each payment, she sets aside 720,000 FCFA across the year. At the deadline, she pays without stress and keeps a net of 2,880,000 FCFA. Without provisioning, she would have had to find 720,000 FCFA all at once, often unavailable.
FAQ
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Do I really have to declare my referral commissions?
Yes. Commissions are taxable professional income. An undeclared activity exposes you to an assessment with penalties and late interest, often far more costly than the original tax.
What is the turnover tax and who qualifies?
The turnover tax bundles the main obligations into a simplified payment for small businesses whose turnover stays under the threshold. It greatly simplifies life for a referral agent.
What share of my commissions should I keep for tax?
A prudent order of magnitude is 15 to 30 %. Provision 20 % by default on receipt of each commission; adjust with your accountant according to your exact regime.
Does VAT apply to my commissions?
Under the standard regime, yes: you charge VAT on top of your commission. Under the turnover tax, VAT is integrated into the single levy and not charged separately.
Does Kolonell provide proof of my commissions?
Yes, every commission paid is traceable (transfer or mobile money) and documented, which eases your declaration. Rates are 15 % showcase, 12 % e-commerce, 10 % marketplace and 8 % institutional.
Let's talk about your project. Become a Kolonell referral agent, collect traceable commissions and declare them cleanly. WhatsApp +221 77 596 93 33.
Mohamed Bah
Fondateur, Kolonell
Passionate about digital and entrepreneurship in Africa, Mohamed has been helping Sénégalese businesses with their digital transformation since 2020. Founder of Kolonell, he believes every SME deserves a professional and accessible online présence.
