Riding companies Uber and Bolt are expressing strong opposition to the Kenyan government’s proposed new taxes, which could have far-reaching effects on the country’s transport sector and digital market.
Details
The Kenyan government proposed a 6% Significant Economic Presence Tax (SEP) on gross turnover for non-resident companies as outlined in the Finance Bill 2024.
This move by the Kenyan government is aimed at increasing revenue from digital services, but has drawn a stern response from the two leading ride-hailing services, which argue that such a tax will severely affect their operations and financial viability in the country.
Digging deeper
The ride-hailing companies argue that the SEP, as currently proposed, does not take into account operating costs, which could push profits from taxi rides below a sustainable threshold.
“With the introduction of the 6% significant economic presence tax, the effective rate for a non-resident in the digital marketplace will be 22% on gross turnover without taking operational costs into account,” Bolt’s director of public policy, George Abbasi he said.
Possibility of price increases
The potential impacts of the proposed tax are significant. Both companies have warned that increased taxation could lead to higher fares for consumers, reduced profits for drivers and possibly even the exit of these platforms from the Kenyan market.
The Kenya Association of Manufacturers (KAM) has joined the debate, calling on the Kenyan legislature to review the tax proposals, which also include an eco-tax, VAT on bank charges and higher excise duties on many goods and services.
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