Digital ride-hailing and logistics service providers Uber and Bolt have hinted at exiting the Kenyan market should the proposed taxes targeting the sector in the Finance Bill 2024 be passed and implemented, explaining that the taxes will lead to unsustainable operating costs.
The Finance Bill 2024 has proposed a 6% Significant Economic Presence (SEP) Tax on gross turnover for foreign-owned but locally operating businesses. The Treasury, through the tax, seeks to tax the income generated by multinationals having a presence in the country, whether with a physical location or operating virtually.
The protest against the SEP tax, which will be 6% if passed, is that it replaces the Digital Service Tax, which is currently charged at 1.5%.
Non-resident companies currently pay 16% VAT and 1.5% Digital Service Tax, giving an effective tax rate of 17.5% on gross turnover. The ride-hailing industry in Kenya is also governed by the National Transport and Safety Authority (NTSA), which has capped ride-hailing commissions at 18%, thereby limiting the companies’ ability to generate sustainable revenue.
