Running an Online Business in Kenya? Here’s How the Finance Bill 2025 Will Impact You
Kenya’s Finance Bill 2025 brings major changes to how online businesses are taxed, signaling a shift toward tighter regulation of the digital economy. Whether you’re running a local e-commerce store or offering services through a global platform, this bill could change your tax obligations significantly.
Digital Marketplaces Now Defined
The bill formally defines a digital marketplace as an online platform that enables users to buy and sell goods or services. This covers e-commerce websites, ride-hailing apps, service booking platforms, and more. The inclusion brings digital businesses into the scope of taxation.
Excise Duty Now Applies to Online Sales
One of the biggest updates is the expansion of excise duty to include goods and services sold via digital platforms. If a platform facilitates the transaction and payment, it will be required to remit a 20% excise duty to the Kenya Revenue Authority (KRA).
However, if your online business uses platforms for marketing only—and collects payments offline—excise duty does not apply. You’ll still be responsible for regular income tax and other obligations.
Tax Rules for Foreign Digital Businesses
The bill also targets non-resident suppliers. If digital services are consumed in Kenya, they are considered taxable, regardless of where the business is based. This means foreign platforms offering services to Kenyans—like Netflix or global SaaS providers—will be expected to register with KRA and pay excise duty.
Who Will Be Affected?
The changes will impact:
- Streaming services like Netflix and YouTube
- Ride-hailing apps like Uber and Bolt
- Online marketplaces like Jumia and Airbnb
- Digital advertising providers
- Cloud software and SaaS platforms
- Online betting and gaming sites
Final Thoughts
The Finance Bill 2025 marks a new chapter for digital taxation in Kenya. If you’re running an online business, now is the time to evaluate your operations, understand your tax obligations, and prepare for compliance. For both local and foreign players, staying ahead of these changes can help you avoid penalties and position your business for long-term growth in Kenya’s evolving digital space.
Article by Suzy Nyongesa
