Drivers signed up by ride-hailing firm Bolt will now foot a 16 percent value-added tax (VAT) on digital supplies, after the Estonian mobility company stopped shouldering the payments—a shift that is likely to spark a new feud between the parties.
Bolt said it had been absorbing the VAT obligation on behalf of the drivers for the past 15 months, since the ratification of the digital marketplace (Electronic, Internet, and Digital Marketplace Supply) tax regulations in 2023.
“With regulatory clarity now in place, and following guidance from the Kenya Revenue Authority (KRA) and the National Transport and Safety Authority (NTSA), we have decided to introduce the VAT obligation,” reads Bolt's statement.
“This step reflects Bolt’s ongoing commitment to regulatory compliance and responsible business operations within the Kenyan digital economy.”
The development could trigger fresh friction between Bolt and its drivers, who for months had been protesting low fares charged on the platform until August last year.
Bolt responded by increasing its base fare across all its trip categories by 10 percent, a gain that will be diluted by the tax shift, which will require drivers to pay an additional 16 percent commission to the platform.
The tax regulations were first published by the Treasury in October 2020, subjecting non-residents providing electronic services to Kenyan individuals – business to consumer (B2C) – to VAT at a 16 percent rate.
They were then tabled in the National Assembly in February 2021, before coming into force on April 1 that year.
The Finance Act 2022, however, amended the VAT Digital Marketplace Supply (DMS) regulations by removing the distinction between business-to-business (B2B) and B2C.
This change meant that recipients of B2B supplies from non-resident suppliers could no longer rely on the reverse charge mechanism for VAT compliance in Kenya.
The Act also demanded that non-resident suppliers of taxable services via a ‘digital marketplace’ must register for VAT in Kenya at the standard rate of 16 percent on all relevant supplies.
The VAT DMS regulations would later be revoked and replaced with the VAT (Electronic, Internet, and Digital Marketplace Supply) regulations in 2023 to take account of additional changes in relation to the taxation of supplies through a digital marketplace.
