Sunday, November 3, 2024 – President William Ruto’s
government has unveiled a legislative proposal to reform the taxation of
digital services in Kenya, introducing a 6 percent Significant Economic
Presence Tax (SEPT) aimed at broadening the tax base.
The new proposal by the treasury targets ride-hailing
platforms, digital food delivery companies, and online freelance jobs,
replacing the current Digital Service Tax, which stands at 1.5%.
The new 6% rate would apply to non-resident entities earning
income through digital marketplaces in Kenya.
“This tax shall be payable by a non-resident person whose
income from the provision of services is derived from or accrues in Kenya
through a business carried out over the digital marketplace,” read a notice
from Treasury Cabinet Secretary John Mbadi.
Treasury stated that the SEPT is intended to ensure foreign
companies generating revenue through digital services in Kenya are taxed
equitably, aligning with international standards.
By targeting significant
economic activities conducted by non-resident entities, the government aims to
boost revenue collection from the expanding digital sector.
The proposed legislation also includes a Minimum Top-Up Tax
to address tax base erosion among multinational enterprises (MNEs).
This
measure sets a minimum effective tax rate of 15% for companies with a
consolidated annual turnover exceeding 100 billion shillings.
Companies paying
less than this rate will be required to top up their tax contributions to meet
the threshold.
The Kenyan DAILY POST
