Digital taxi companies Uber and Bolt have warned that they could be forced to exit the Kenyan market due to rising operational costs.
Appearing before the National Assembly Finance and Planning Committee on Wednesday, June 5, 2024, the two companies argued that the Finance Bill 2024, if adopted as is, would push them out of the market.
Uber and Bolt challenged the 6 per cent Significant Economic Presence (SEP) tax proposed by the National Treasury targeting non-resident firms.
The tax hopes to rope in multinational companies trading in Kenya whether or not they have a physical presence in the country.
The law requires all foreign companies with digital operations in Kenya to pay the tax.
“Non-resident companies currently pay a 16 per cent Value Added Tax (VAT) with no opportunity to deduct input VAT. They also pay 1.5 a per cent Digital Service Tax (DST), giving an effective tax rate of 17.5 per cent on gross turnover, not profit,” Bolt’s Public Policy Manager George Abasy said.
The official termed the tax as unfair to multinationals operating in the country. He argued that SEP is similar to the 3 per cent turnover tax paid by the companies.
Bolt and Uber told parliament to amend the clause that sought to introduce withholding tax on payments made on digital platforms. They also want SEP deleted and the rate retained at 1.5 per cent.
“The withholding should be by platform owners who make payments to platform users, not platform owners who facilitate payment,” Uber’s Tax Manager in Africa Chizoba Nnonyelu said.
SEP seeks to replace DST, where digital service providers pay 1.5 per cent of the gross transactional value and 16 per cent VAT.
