Kenya has set its sights on some of the world’s biggest technology companies, unveiling new rules that will force them to pay tax on services used by millions of Kenyans.
The National Treasury has published draft regulations under the Income Tax Act that would introduce a “Significant Economic Presence Tax.” This levy is aimed at foreign firms earning from Kenyan users, regardless of whether they have offices in the country.
The rules extend far beyond streaming platforms. They cover a wide range of services including artificial intelligence tools, search engines, e-learning, cloud hosting, online ticketing, digital advertising, ride-hailing apps and online marketplaces.
That means household names such as Netflix, TikTok, Google, Amazon Web Services, Airbnb, Coursera and ChatGPT could soon be required to remit tax on revenue earned locally.
Treasury officials say the reforms are about fairness. Local businesses already pay income tax, while global firms have long operated in Kenya’s digital space without contributing equally. “We are simply ensuring that everyone doing business here plays by the same rules,” said a senior Treasury official who asked not to be named as they were not authorised to speak publicly.
The regulations also outline how companies will be identified and taxed, using indicators like Kenyan IP addresses, billing details and local payment systems.
Kenya is not alone in this. Governments across Europe, Asia and Africa have introduced similar measures, while the Organisation for Economic Co-operation and Development (OECD) continues to push for a unified global approach.
Experts warn, however, that the system must be carefully designed. Poor implementation could lead to double taxation, high compliance costs or deter innovation in Kenya’s growing tech space.
If enacted, the Significant Economic Presence Tax would mark a major step in Kenya’s bid to safeguard public revenue in an increasingly digital world, and could set a precedent for other African nations.
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