Digital ride-hailing and logistics service providers Uber and Bolt have hinted at leaving the Kenyan market if the proposed taxes in the Finance Bill 2024 are passed and implemented.
The companies argue that these taxes would lead to unsustainable operating costs.
The Finance Bill 2024 proposes a 6% Significant Economic Presence (SEP) Tax on the gross turnover of foreign-owned businesses operating locally. This tax aims to capture income generated by multinationals with a presence in Kenya, whether through physical locations or virtual operations.
This SEP tax, set at 6%, would replace the current Digital Service Tax, which is charged at 1.5%. Non-resident companies currently pay 16% VAT and 1.5% Digital Service Tax, resulting in an effective tax rate of 17.5% on gross turnover.
Additionally, the ride-hailing industry in Kenya is regulated by the National Transport and Safety Authority (NTSA), which has capped ride-hailing commissions at 18%, limiting the companies’ ability to generate sustainable revenue.
Uber and Bolt argue that the combined financial burdens of the proposed SEP tax, existing VAT, and commission caps will make it unfeasible for them to continue operations in Kenya.
