A Bill introduced to Parliament by Kenya’s National Treasury is drawing significant attention from freelancers, digital workers, musicians, drivers, and other self-employed Kenyans.

The Business Laws (Amendment) Bill 2024 proposes sweeping changes to how employment is defined and taxed, effectively bringing the gig economy into the country’s formal tax net. Under the proposed amendments, the definition of an “employee” would be expanded to include anyone working for wages, remotely or on-site, even for short periods.

“Employee means a person who is employed for wages or a salary and includes an apprentice, indentured learner, and a person who performs his duties remotely or on-site within a business process outsourcing arrangement or an information technology-enabled service,” the bill reads in part.

This means many previously untaxed freelancers would now be subject to statutory deductions similar to those imposed on salaried workers. While the bill presents the move as part of a broader effort to “create a conducive environment for doing business,” many within Kenya’s informal economy fear it may achieve the opposite.

By requiring organisations that engage freelancers, even temporarily, to provide tools, equipment, and statutory benefits, the cost of compliance may discourage companies from hiring gig workers altogether.

This change will impact people like 27-year-old George Kamau, who resides in Roysambu. Kamau, a freelance graphic designer who begins each day balancing his laptop on a plastic table in his one-room bedsitter

He juggles projects from clients across Kenya and the diaspora, with his income fluctuating depending on each WhatsApp message or email brief. Like many young Kenyans, Kamau turned to the gig economy out of necessity rather than choice—a response to shrinking job opportunities, rising living costs, and the collapse of traditional employment. For Kamau, who earns between Sh15,000 and Sh30,000 a month depending on the volume of gigs, the proposed law feels like a punch to the gut. “Sometimes you go a whole week without a job,” he says. “Now the government wants to tax what little we have left?”

Although the bill also proposes that companies provide gig workers with the necessary tools and equipment to perform their duties, this could lead to reduced take-home pay and create additional financial and logistical burdens for employers, who may struggle to calculate the relevant deductions—costs that could ultimately be passed on to the freelancers themselves.

Depress consumer spending. This reduction in disposable income could further depress consumer spending, weakening demand for goods and services and rippling through other sectors of the economy.

“The employer shall ensure that an employee working remotely or on the employer’s site is provided with the necessary tools, equipment, and resources to effectively perform his duties,” the bill states. It adds that, “The purpose of the Bill is to amend various statutes so as to create a conducive environment for doing business.” The bill also redefines a “self-employed person” as anyone earning income outside of a formal employment contract, regardless of whether they employ others. This means that musicians, taxi drivers, construction labourers, and others in similar professions would also be subject to new statutory deductions.

The move comes against the backdrop of Treasury Cabinet Secretary John Mbadi’s recent statements about the government’s efforts to expand its tax base. With Kenyans already feeling the squeeze from the high-tax regime, the Treasury is now looking to untapped revenue sources.

“We cannot continue increasing rates on direct income, employment income, or other direct taxes,” Mbadi told Parliament last month. “Direct taxes have the potential of reducing disposable income, which again reduces demand for goods and services—ultimately affecting production and employment.”

He emphasised the need to explore other avenues to raise revenue while cushioning citizens from additional tax burdens. “There are many Kenyans out there who are very capable of paying taxes, but because they are not visible, they are not paying,” he added in a separate interview.

Mbadi cited rental income as one such area with untapped potential. Although it currently contributes just 17 per cent to total tax revenue, he believes it could generate significantly more.

Many Kenyans in the gig economy rely on their creativity, skills, and technology to survive. With unemployment deepening both in Kenya and across the continent, freelancing has become a lifeline for thousands. Companies also increasingly depend on this creative labour to grow sales and expand their reach, especially amid shrinking demand in the formal Kenyan market.