Kenyans will in 2025 have to dig deeper into their pockets to pay for multiple technology products after the introduction of a raft of new taxes that is set to increase the prices of the goods and services in the industry.
Some of the taxes are not entirely new, but renewed measures to enforce them will make it harder to evade or avoid them, forcing Kenyans to pay more for the products. Here are the taxes and how they might affect you:
This is the new Digital Services Tax (DST), but higher and with a wider focus. The Sept was introduced through the recently passed Tax Laws (Amendment) Act of 2024 and will be levied at 6 percent of prices, as opposed to the 1.5 percent rate of the DST. It targets non-resident companies that offer services through the marketplace.
That means ride-hailing, social media, video and audio streaming, digital content sale, e-commerce, and online delivery among others.
Many of the targeted companies often pass the tax on to the consumers, meaning that Kenyans will be paying more for Spotify, Netflix, YouTube, LinkedIn, X, and several other products accessed online.
However, some service providers that will be affected by the tax have indicated intentions to absorb it to cushion consumers from higher prices.
Uber, for instance, said it will have to cover the cost of the tax because its commission from drivers is capped by the regulator at 18 percent meaning that it cannot take any more money from drivers, but has to pay the tax.
“An additional tax of 6 percent cannot be passed to the consumer, which is the driver for us, so that cost will have to be borne by Uber,” said Uber head of East Africa Imran Manji. Other digital taxi firms are yet to disclose their position on the new tax that is set to rollout from January.
Excise Duty on online advertisement for alcohol and betting
With over half of adult Kenyans now online, advertising on social media and the internet has become huge.
From January, advertisers of alcoholic beverages and betting, lottery, or gambling services will have to pay an extra 15 percent as excise duty to put their adverts on Facebook, X, YouTube, Spotify, Google, Instagram, and other social media and online platforms.
This tax, also introduced in the Tax Procedures (Amendment) Act, is meant as a ‘sin’ tax to discourage widespread marketing of alcoholic beverages and betting or gambling activities, added to the excise duties already levied on the products in those markets.
This duty will increase the cost of marketing these services, potentially leading to a cutback on them or a higher cost for consumers, which is much less likely as users already shoulder other taxes levied on the products.
From January, Kenyans returning home will have to pay a 10 percent excite duty on all phones bought outside the countries worth over $2,000 (Sh258,500). This follows the introduction of new rules to ensure mandatory declaration of all phones upon arrival in Kenya by all citizens and residents.
The Communications Authority of Kenya (CA) warned in October that it will block all undeclared phones by January, meaning that any phones that might have been smuggled into the country without paying the necessary duties will cease to work.
The tax, in itself, is not new, but the plan to block unregistered phones is likely to force many to pay taxes for their phones to continue using them. It could also increase the prices of the critical communication devices as importers are forced to comply with the new regulations.
Tax on crypto transactions
The 3 percent tax on crypto transactions will be stepped up in 2025 after the taxman integrates its systems with cryptocurrency exchanges and marketplaces operating in the country.
While the tax was introduced in 2023 and came into effect in September last year, KRA has had no means of monitoring the transactions, forcing it to rely on voluntary contributions by players in the sector.
This year, KRA reported a collection of Sh10 billion from 384 crypto traders, but seeks to increase that amount six-fold to at least Sh65 billion in 2025, meaning that it will up its efforts to bring the sector into the tax bracket. Already, the taxman announced plans to install a system that will monitor crypto transactions live, enabling it to tax them.
