Kenyans will face increased costs for various technology products and services in 2025 following the introduction of several new taxes and stricter enforcement of existing ones. These measures, aimed at boosting government revenue, are expected to raise prices across the industry.
Revised under the Tax Laws (Amendment) Act of 2024, the SEPT replaces the Digital Services Tax (DST) with a higher rate of 6% (up from 1.5%) and a broader scope.
The tax targets non-resident companies offering digital services such as ride-hailing, e-commerce, streaming platforms, social media, and digital content. Consumers are likely to see higher charges for services like Spotify, Netflix, YouTube, LinkedIn, and others, as many companies pass the cost to users.
However, some service providers are absorbing the tax to shield users from price hikes. For example, Uber announced it would cover the cost due to regulatory caps on its driver commissions. Other digital taxi platforms have yet to declare their stance as the tax takes effect in January.
From January, advertisers promoting alcohol, betting, lotteries, or gambling services online will pay an additional 15% excise duty under the Tax Procedures (Amendment) Act.
This “sin tax” is designed to discourage the widespread marketing of such products and services. While this may lead to reduced advertising in these sectors, it could also result in increased costs for consumers who already pay taxes on these products.
Starting in 2025, Kenyans returning home will pay a 10% excise duty on phones purchased abroad worth over $2,000 (Sh258,500). The Communications Authority of Kenya (CA) will also block undeclared or untaxed phones from January, enforcing mandatory declaration rules at entry points.
The regulation aims to curb smuggling and ensure compliance but could increase phone prices as importers adjust to the new system.
A 3% tax on cryptocurrency transactions, introduced in 2023, will see stricter enforcement in 2025 as the Kenya Revenue Authority (KRA) integrates its systems with crypto exchanges and marketplaces.
Previously reliant on voluntary reporting, the KRA collected Sh10 billion from 384 crypto traders in 2024. With plans to install live transaction monitoring systems, the authority aims to increase this figure six-fold to Sh65 billion in 2025.
These taxes signal a significant shift in Kenya’s approach to regulating its rapidly growing tech sector. While aimed at boosting government revenue and curbing tax evasion, they may result in higher costs for consumers, particularly for essential services and devices.
As companies adjust to the new tax landscape, the extent to which these costs will be absorbed or passed on remains to be seen. For Kenyans, this could mean paying more for everyday digital services and products in an increasingly connected economy.