The government has introduced a 15 per cent excise duty on digital services provided by non-resident companies, which is expected to significantly impact consumers. Services such as streaming and e-learning may see price increases as a result.

This new tax aims to create fairness by ensuring non-resident service providers meet the same excise duty obligations as local firms. It builds on previous initiatives to expand Kenya’s tax base, including the Digital Services Tax (DST) introduced in 2021 at 1.5 per cent and a 16 per cent Value Added Tax (VAT) on digital services, also implemented in 2021.

Experts at audit firm KPMG say that while this policy is meant to level the playing field, it is expected to raise operational costs for non-resident providers, who may pass these costs onto consumers. As a result, Kenyan consumers could face higher prices for digital services, potentially limiting access in one of Africa’s fastest-growing digital economies.

Money transfer and advertising

In addition to streaming and e-learning services, the excise duty will also apply to money transfer fees, banking services, telcos, betting, gaming, and advertising. This expansion could raise the cost of digital transactions, discourage financial inclusion, and reduce transaction volumes, which may, in turn, lower government revenue as consumers seek cheaper alternatives or reduce usage altogether.

Non-compliance with these regulations will lead to penalties. Providers must apply for an operating license from the Commissioner, with fines of Sh100,000 for each month they remain unlicensed.

Betting and gaming excise duties must be paid within 24 hours after daily transactions, while other duties are due by the 20th of the following month.