Kenya is preparing to introduce new tax rules aimed at global technology companies that earn income from local users without having offices in the country.
The National Treasury has proposed the Income Tax (Significant Economic Presence Tax) Regulations, 2025, which will require foreign digital service providers to pay taxes on revenues generated from Kenyan users.
According to the draft regulations, any non-resident company that provides online services accessed in Kenya will be considered to have a “significant economic presence.”
This will apply whether or not the company has a physical office in the country.
The Treasury says the new framework is meant to ensure fairness as digital companies continue to expand their influence and make profits from Kenyan consumers.
The proposed law will affect a wide range of global platforms. This includes artificial intelligence tools such as ChatGPT, search engines like Google, streaming platforms such as Netflix, online marketplaces, e-learning programs, cloud computing providers, and ride-hailing apps.
Companies offering online ticketing, event bookings, subscription services, and even data-driven advertising will also fall under the new tax regime.
The government will identify Kenyan users through details such as local IP addresses, billing information, mobile country codes, and payment facilities linked to Kenyan banks.
This means that if a Kenyan pays for services on Netflix, downloads apps from Google Play, books a ride via Uber, or interacts with an AI-powered platform, the company behind the service will be required to pay tax in Kenya.
The regulations propose that taxable profits will be calculated as 10% of a company’s gross turnover from Kenya. Out of that amount, 30% will be taxed, effectively translating to a 3% tax on all revenues earned from Kenyan users.
The proposed law will affect a wide range of global platforms. This includes artificial intelligence tools such as ChatGPT, search engines like Google, streaming platforms such as Netflix, online marketplaces, e-learning programs, cloud computing providers, and ride-hailing apps.
Companies offering online ticketing, event bookings, subscription services, and even data-driven advertising will also fall under the new tax regime.
The government will identify Kenyan users through details such as local IP addresses, billing information, mobile country codes, and payment facilities linked to Kenyan banks.
This means that if a Kenyan pays for services on Netflix, downloads apps from Google Play, books a ride via Uber, or interacts with an AI-powered platform, the company behind the service will be required to pay tax in Kenya.
The regulations propose that taxable profits will be calculated as 10% of a company’s gross turnover from Kenya. Out of that amount, 30% will be taxed, effectively translating to a 3% tax on all revenues earned from Kenyan users.
The gross turnover will include all income from digital services, excluding VAT.
For companies that operate online marketplaces, the tax will be based on commissions or fees earned from transactions conducted by Kenyan users.
To comply with the new rules, non-resident companies must either register directly through a simplified tax system or appoint a Kenyan tax representative.
Once registered, the Kenya Revenue Authority (KRA) will issue a tax identification number, and the companies will be expected to file monthly returns and remit the tax by the 20th day of the following month.
Companies already registered under the Digital Service Tax (DST) framework introduced in 2020 will automatically move to the new system once it is implemented.
Airlines partly owned by the Kenyan government and companies with existing permanent establishments in Kenya will be exempt.
Alongside the new regulations, Kenya has also introduced a 10% excise duty on cryptocurrency service providers.
Firms dealing in digital assets will now be required to apply for licenses, maintain offices in Kenya, and comply with the Data Protection Act.
The move signals Kenya’s determination to increase its revenue collection from the rapidly growing digital economy.
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