Taxation of Digital Transactions in Kenya: An Overview

Kenya has responded to the growing digital economy by introducing targeted taxes to ensure revenue collection from online services and platforms. These measures address the challenge of taxing digital businesses that may not have a physical presence in the country but derive significant income from Kenyan users. Key taxes include the Digital Services Tax (DST) at 1.5% on non-resident entities offering services via digital marketplaces, VAT on digital services at 16% applicable to both resident and non-resident suppliers, and Excise Duty on services such as digital loans, mobile money transfers and online advertisements.

Additionally, the Significant Economic Presence Tax (SEPT) was enacted in the Finance Act, 2024, at 3% on gross turnover earned by non-residents without a permanent establishment in Kenya. Platforms facilitating digital content monetization are also now within the withholding tax net, with resident content creators taxed at 5% and non-residents at 20% on gross earnings.

These developments highlight Kenya’s commitment to modernizing its tax framework to keep pace with the rapidly evolving digital landscape, while also aligning with global tax trends.

The government had introduced a Digital Assets Tax from September 2023, charging 3% on the transfer or exchange of digital assets, e.g. cryptocurrencies and NFTs, with the tax collected by platforms facilitating the transactions.  The tax was, however, formally repealed by the Finance Act, 2025, effective 1 July 2025, and replaced with a new 10% excise duty on fees charged by digital‑asset service providers.