Ride-hailing companies Uber and Bolt warn their operations in Kenya could become unsustainable if the parliament passes a proposed 6% Significant Economic Presence (SEP) tax outlined in the Finance Bill 2024.
Bolt’s public policy manager, George Abasy, told a parliamentary finance committee that the new tax would raise the total tax rate for non-resident digital companies to 22% on gross turnover, without accounting for operating costs. Bolt’s tax manager, Celia Kuria, added that this tax increase would make short trips costing less than KES500 unprofitable, impacting most urban and peri-urban riders.
The Finance Bill 2024 suggests a 6% SEP tax on the gross turnover of all non-resident companies. Representatives from Uber, a US-based company, and Bolt, an Estonian firm, appeared before the committee, warning that such taxes previously drove foreign firms out of Nigeria and could do the same in Kenya.
Experts cautioned that higher taxes could reduce the already thin profit margins and drivers’ earnings, potentially leading to the industry’s collapse and significant job losses in a country already facing high unemployment.
Uber urged the National Assembly to reject the tax proposal, as President William Ruto’s administration seeks to increase revenue to pay off national debt and fund promises like affordable housing.
Uber’s tax manager, Chizeba Nnonyeh, pointed out that the SEP tax does not clearly define how a non-resident company would be considered to have a significant economic presence in Kenya, which is necessary for tax liability.
The Kenya Association of Manufacturers (KAM) also joined the debate, asking the legislature to reconsider the SEP tax and other proposed taxes, including the eco-tax, VAT on banking fees, and increased excise duty on various goods and services.
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