Upwork Connects and Taxation: What Kenyan Freelancers Need to Know

understanding how to get Upwork connects

In the world today, many people choose to work in a freelance capacity. Take it on a gig or two at a time and move on to the next. For a number of these professionals, Upwork has been the prominent online freelance marketplace. It connects businesses and individuals with a wide range of freelancers, professionals, and experts offering various skills and services. The platform enables clients to find and hire freelancers for tasks and projects in fields such as web development, design, writing, marketing, programming, and much more.

Upwork Connects Introduction

In 2019, Upwork introduced a significant change by implementing Connects, which marked a new era. Previously, freelancers were able to submit free proposals in their search for jobs. This shift huge shift was obviously controversial and was a hard pill to swallow for many in the freelance community. Presently, Connects are an indispensable element of the Upwork ecosystem. They are a digital currency specifically for the Upwork ecosystem. Basically, one has to have Connects to submit a proposal. Typically, the number of connects needed for a submission ranges from 2 to 16 Connects.
An insufficiency of Connects necessitates a monetary investment in the hopes of garnering a client’s attention. Upwork has two account tiers. A basic account and a Freelancer Plus account. The Freelancer Plus account is a premium account paid for every month. These types of accounts receive 80 Connects every month. The Basic accounts receive a monthly allotment of 10 free Connects.

Use of Connects

The utility of Upwork Connects can be categorized into three primary functions: applying for jobs, boosting proposals, and obtaining the Availability badge. The predominant use of Connects is in the process of applying for jobs, with different jobs requiring varying amounts of Connects for proposal submission. Certain job postings, particularly those where the freelancer is directly invited by the client, do not necessitate spending Connects.

The essence of the boosted proposal system is to enhance visibility. Spending Connects on this helps Freelancers have an edge in landing a job. Ideally, it would usually land your proposal as a freelancer in the top three slots of a client’s list of applicants.
Additionally, Upwork Connects is utilized to activate the Availability badge on a freelancer’s profile. The Upwork Availability badge signals a freelancer’s readiness for new projects. This badge can be activated from the freelancer’s profile page, with freelancers choosing the maximum number of Connects they wish to allocate each month to maintain the badge status as “On.”. As a side note, staying away from your Upwork profile leads to an automatic “Off”. This is usually changed on the settings page but may sometimes need intervention from Upwork support.

Notably, as of January 11, 2023, Upwork’s Product Development team initiated a beta test for a client filter that enables them to search for freelancers with the Availability badge. Freelancers with the “Available Now” badge are specifically displayed to clients who have activated this filter. However, not having an “Available Now” badge does not mean a client cannot view your profile and proposal after submission. It just means your profile can not be found by potential clients searching. So, having the badge increases your chances of getting hired. I presume this is what everyone wants.

How to Get Upwork Connects

To replenish your Upwork Connects, you have three avenues: Purchased Connects, Earned Connects, and Free Connects. Connects can be purchased in bundles, ranging from 10 to 80 Connects, with each Connect costing $0.15. In some countries, this is $0.15 plus tax, meaning you might pay more depending on your country’s tax rate. The purchasing of Connects occurs through the Membership & Connects section in the Settings tab. An individual account can accumulate a maximum of 270 Connects.

Purchasing Upwork Connects

Earned Upwork Connects come through various activities and achievements on Upwork, such as registering for the platform, obtaining a Rising Talent badge, completing Skills Certifications, and participating in interviews with established Upwork clients. All these have their unique level of difficulty, especially for those who are new to the platform. For example, the Upwork Skills Certifications program is invite-only. Generally, freelancers who have been on the platform for a while are the ones invited to the program.

Free Connects are typically a one-time allocation and are not designed for regular acquisition. They are granted to incentivize freelancers to engage in desired actions, such as signing up, delivering exceptional customer experiences, improving their profile, and collaborating with preferred clients.

In specific instances, the use of Upwork’s Boosted proposal system may result in Connects being refunded to your balance, although this does not constitute a source of free Connects. Connects are refunded when the bid amount exceeds the required sum for proposal boosting or when the bid is too low and does not result in a boosted proposal.

Experienced freelancers, especially those with Freelancer Plus accounts, often have a steady supply of Upwork Connects, rendering concerns about Connects depletion less pressing. For beginners, Connects may pose a more significant concern, especially when they are still establishing their presence on Upwork.

Optimize Use of Connects

To ensure that you make the most of your Upwork Connects and avoid unnecessary expenditure, consider these strategies:

Enhance Your Proposals: Crafting compelling and targeted proposals is a learning process, but it can significantly improve your response rate.
Showcase Quality Work: Clients are drawn to visual representations of your skills and abilities. Create impressive work examples to boost your appeal.
Optimize Your Profile: A professional and persuasive profile can make a substantial difference in attracting clients’ attention and inquiries.
While seasoned professionals may seldom run out of Connects due to their monthly allocation, beginners should be mindful of how they allocate their Connects, especially in the early stages of their Upwork journey.

Kenya Upwork Tax

2021 research findings indicate that 5% of the adult population in Kenya are digital workers. This translates to 1.2 million Kenyans, most of whom are working on Freelancer, Writer Access, and Upwork. As with most countries in the world, Kenyan residents are required by law to declare their income tax returns to the Kenya Revenue Authority (KRA).
In Kenya, the current Value Added Tax (VAT) rate stands at 16% of the service cost subject to taxation. For instance, if your freelancer service fees amount to $100 USD, you will incur a tax of $16, resulting in a total payment of $116.
You will encounter the estimated tax amount during the checkout process and find it detailed on your invoices and Transaction History.
Upwork does not mandate the submission of a VAT ID, and providing a valid VAT ID does not exempt you from tax obligations. However, if you opt to furnish your VAT ID, it will be displayed on your invoices. You can input this information in your account’s Settings under Tax Information.
For individuals, what Upwork refers to as the Kenya VAT ID is what we normally refer to as KRA Pin. This is 11 alphanumeric characters given to Kenyan by KRA. It resembles a format like this: A999999999A, for example. VAT on Upwork is collected and remitted to KRA by the platform.

Upwork Tax Information Under Settings

Tax for Kenyan Businesses on Upwork

Businesses that have employees are required to pay taxes. A business will have to file statutory deductions like HELB, NHIF, and NSSF monthly. Businesses that employ freelancers and consultants on Upwork will deduct 5% Withholding Tax (WHT) for professional and management services offered.
This tax is applicable for services exceeding KES. 24,000 per month. It is important to note that WHT applies only to services offered and not goods sold. The deducted amount will be remitted to KRA as a prepayment of your annual income tax.
These taxes have been in effect ever since the government made it a requirement for digital service providers to remit taxes. Since the law was passed in 2021, VAT has been applicable even for other platforms like Netflix, Facebook, and Google to name a few.
Confirming this Upwork writes on their website “ We’re required to comply with the tax laws of the countries where we operate to continue to do business in those countries. Kenya requires that we collect VAT on Upwork services and remit them to your government.”

Location Change and Tax Exemption

VAT is applicable even to freelancers residing in the country temporarily. In the event, you are domiciled in Kenya and relocate to another tax regime, make sure to update your tax information on Upwork promptly.
Lastly, in case you are exempt from VAT, you will need to provide your valid tax exemption certificate. Once you do this, Upwork will no longer charge you for VAT.