Digital taxi-hailing companies Bolt and Uber have threatened to halt operations in the country if the proposed six per cent Significant Economic Presence (SEP) tax in the 2024 Finance Bill is passed.
While appearing before the National Assembly’s Finance and Planning Committee the firms tabled their submissions stating that the SEP tax will impair the cab industry, adversely affecting customers through hiked cab fares. READ FULL STORY
The SEP tax is a levy imposed on non-resident firms, targeting income from large multinationals operating in Kenya through a business operating on a digital marketplace.
Further, the companies argued that should the SEP tax be imposed the industry could face imminent collapse due to losses, as already they are currently charged with 16 per cent Value Added Tax(VAT) and 1.5 per cent Digital Service Tax.
“Non-resident companies currently pay a 16 per cent Value Added Tax (VAT) with no opportunity to deduct input VAT. They also pay 1.5 a per cent Digital Service Tax (DST), giving an effective tax rate of 17.5 per cent on gross turnover, not profit,” Bolt’s Public Policy Manager George Abasy stated.
The National Treasury aims to replace the current 1.5 per cent Digital Service Tax (DST) with the six per cent SEP on income derived from digital services in Kenya.
The warning issued by the firms has elicited mixed reactions, with many angry with the government over the proposed SEP levy, and others debating the possible implications of the exit.
“Uber and Bolt have also warned to leave Kenya owing to the ERRATIC TAX REGIMES the government imposes on industries. What’s wrong with Zakayo’s government?” one X user posed.
“They(the government) think it will make it hard for them to make a profit in Kenya. If they leave, it will be hard for us especially the many who earn a living from it,” Yussuf Omar Dakane wrote.
“Uber & Bolt pulling out of Kenya? Where else will I get a nduthi for 250 from ruaka to kilimani man?” student Brain asked.
“The same Uber and Bolt pay higher taxes in the US and Europe. They offer better working conditions to their employees than Kenya. They can go asap,” one named George Kenyan opined.
Many international companies plan on packing up shop as they say it is getting tough to operate in the country, due to the high cost of doing business and reduced competitiveness in the East African Region.
