Bolt and Uber have warned that they might shut down operations in Kenya if Parliament approves a proposed six percent Significant Economic Presence Tax (SEP) on gross turnover for non-resident firms, which is part of the Finance Bill 2024
The SEP would replace the current 1.5 percent Digital Service Tax (DST). The companies argue that the SEP would result in an effective tax rate of 22 percent on gross turnover, greatlly impacting their already low margins and potentially collapsing the industry.
Currently, non-resident companies pay a 16 percent VAT and a 1.5 percent DST, totaling an effective tax rate of 17.5 percent on gross turnover. Bolt’s Public Policy Manager George Abasy and Africa Tax Manager Celia Kuria explained that the SEP, combined with VAT and capped ride-hailing commissions, would push earnings into a net loss for rides under Ksh 500.
Representatives from Uber and Bolt pointed out that similar taxation policies in Nigeria had led to the withdrawal of several foreign firms. They warned that the introduction of SEP in Kenya could have a similar effect, pushing out international digital service providers and leading to a contraction in the market.
Uber’s Tax Manager Chizeba Nnonyeh pointed out that the SEP does not clarify how a non-resident company would be deemed to have significant economic presence in Kenya. Both Uber and Bolt have asked the committee to maintain the DST at 1.5 percent and to remove the proposed SEP and the additional withholding tax on digital marketplace payments.
They argue that the withholding tax would unfairly burden passengers and food purchasers, requiring them to remit five percent of their payments.
