The Kenyan government, under President William Ruto, has introduced a new legislative proposal to increase taxes on digital services. This move includes implementing a 6% Significant Economic Presence Tax (SEPT) designed to expand the country’s tax base.

The proposed 6% SEPT would replace the existing 1.5% Digital Service Tax. It aims to apply to non-resident companies that earn income from digital platforms in Kenya, such as ride-hailing services, food delivery apps, and online freelance platforms.

In a statement, Treasury Cabinet Secretary John Mbadi explained, “This tax will be payable by non-resident entities whose income is generated from or accrues within Kenya through digital business activities.”

The goal of the SEPT is to ensure that foreign companies earning revenue in Kenya through digital services pay a fair share of taxes, aligning with international standards. This approach is intended to help Kenya increase revenue from the rapidly growing digital economy.

Additionally, the government has proposed a Minimum Top-Up Tax to prevent tax base erosion by multinational corporations. This rule would require multinational companies with annual revenues exceeding 100 billion shillings to meet a minimum tax rate of 15%. Companies falling below this threshold would need to “top up” their contributions to meet the standard.

With these new measures, the government aims to secure a more equitable share of revenue from both local and foreign digital business activities in Kenya.