Kenya’s new digital tax framework imposes a 3% levy on non-resident entities operating in digital marketplaces, replacing the previous Digital Services Tax (DST). This tax is complemented by a withholding tax system, Value-Added Tax (VAT) registration, and excise duties on digital services. The new tax regime presents significant challenges for U.S. technology companies operating in Kenya. These companies must navigate complex compliance requirements across various tax categories.
The broad scope of Kenya’s definition of digital marketplaces means nearly all major U.S. tech platforms will fall under these obligations. Chinese technology companies may benefit from Kenya’s digital tax framework due to state-backed support and subsidies. Chinese firms may find it easier to absorb the costs associated with Kenya’s new tax regime, offering them a competitive edge in the Kenyan and broader African markets.
