Tech Companies in Kenya Must Pay 1.5% Digital Tax Under New Law

Tech companies operating in Kenya must pay digital services taxes beginning Jan. 1 under a new law signed by President Uhuru Kenyatta.

The East African nation will impose a 1.5% tax on services provided by companies such as Netflix Inc., Uber Technologies Inc., and other online marketplaces and digital service providers. The law was signed by the president on Tuesday.

• Kenya expects the tax to generate about 2 billion shillings ($19 million) in annual revenue, Waihenya Ndirangu, the member of Parliament who sponsored the bill, said last month. Kenya’s 11-month tax collection for the year through May was 1.33 trillion shillings.
• Kenyan officials are also working on a measure to apply a value-added tax to online marketplaces and digital service providers, the revenue authority said May 29. That would be in addition to the 1.5% digital tax.
• Under the draft legislation, the affected digital marketplace services would include downloadable digital content, search-engine services, subscription-based news, streamed shows and music, transport platforms, web-hosting services, and other marketplaces as determined by the commissioner.