NAIROBI,Kenya– The Kenya Revenue Authority (KRA) has released the draft Income Tax (Significant Economic Presence Tax) Regulations, 2025, for public consultation, setting the stage for a fresh bid to tax global digital giants operating in the local market.
In a public notice, the Commissioner General said the draft rules have been developed on behalf of the Cabinet Secretary for National Treasury and Economic Planning in compliance with the Statutory Instruments Act.
“In compliance with the same Act, the Commissioner General, on behalf of the Cabinet Secretary, the National Treasury and Economic Planning, invites interested members of the public, professionals and stakeholders to submit their inputs and comments for consideration in the finalisation of the Regulations.”
“The draft Regulations have been posted on the KRA website. You may download the draft Regulations for your reference.”
The regulations target companies with a significant economic presence in Kenya, including digital platforms that earn revenue from local users without a physical presence in the country.
Submissions are due by October 7, 2025.
Kenya first introduced a Digital Service Tax (DST) in January 2021 at a rate of 1.5% on gross transaction value, largely aimed at big tech firms such as Google, Meta, and Netflix.
The tax was later adjusted to 3% under the Finance Act 2023. However, implementation faced hurdles, with global tech players lobbying against unilateral measures and the Organisation for Economic Co-operation and Development (OECD) pushing for a global minimum tax framework.
The proposed Significant Economic Presence Tax (SEPT) represents an evolution of Kenya’s attempts to align its tax framework with international practice while ensuring foreign digital companies pay their fair share.
The taxman contends the move reflects growing pressure on governments to widen tax bases amid rising fiscal deficits.
In the 2025/26 budget, Treasury projected tax revenues to hit KSh 3.1 trillion, but enforcement remains a challenge.
If enacted, the SEPT will replace existing DST provisions, providing a clearer legal framework for taxing digital transactions.
Stakeholders are expected to debate issues around compliance costs, enforcement, and the impact on digital trade.
What SEPT Means for Digital Firms
- Who pays? Multinational tech companies and digital platforms generating income from Kenyan users without a physical presence.
- What changes? Replaces the Digital Service Tax (DST) with a broader and clearer legal framework.
- Why now? Kenya is aligning with global tax reforms while seeking to expand its revenue base.
- Deadline: Stakeholder submissions must be sent to KRA by October 7, 2025.
