Kenya’s High Court has ruled that major digital service providers, including Uber, Jumia, and Glovo, must pay a 16% Value Added Tax (VAT) on their services, marking a significant development in the country’s digital economy regulation. The ruling, delivered in Nairobi, upholds the Kenya Revenue Authority’s (KRA) position that digital platforms offering ride-hailing, e-commerce, and delivery services fall under taxable entities under the Value Added Tax Act.
The case, which had been ongoing since 2022, was brought forward after several digital companies contested the inclusion of their services under VAT, arguing that they were intermediaries connecting customers to independent service providers rather than direct sellers. However, the High Court dismissed these claims, stating that the platforms operate as facilitators of taxable transactions and, therefore, are obligated to remit VAT on commissions and service charges earned in Kenya.
Justice David Majanja, who delivered the ruling, emphasized that “the digital economy cannot exist outside the country’s tax framework.” He added that as digital transactions increasingly dominate the market, equitable taxation is essential to ensure a level playing field between traditional businesses and online platforms.
The ruling is expected to have wide-reaching implications for Kenya’s fast-growing gig and digital marketplace. For consumers, the decision could lead to higher service costs, as companies may pass on the additional tax burden to users. Analysts, however, argue that the move could enhance tax transparency and help the government increase revenue from a rapidly expanding digital sector.
Uber, Jumia, and Glovo have yet to issue formal statements, but industry observers expect that the companies will review their pricing models and possibly seek further legal interpretation or appeal.
The decision comes as Kenya continues its aggressive push to tax the digital economy, following the introduction of the Digital Service Tax (DST) in 2021. With this High Court ruling, Kenya joins a growing list of African countries — including Nigeria and South Africa — enforcing stricter tax policies on global and local digital platforms to boost domestic revenue generation.
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