KRA Pushes to Have Banks, Clients Withhold Taxes for Non-Compliant Foreign Firms
KRA) is seeking new powers to collect revenue from foreign technology companies, including the ability to order local banks, payment processors and even customers to withhold and remit taxes..
✨ Key Highlights
The Kenya Revenue Authority (KRA) is proposing new regulations allowing it to compel Kenyan banks, payment processors, and customers to withhold and remit taxes on behalf of non-compliant foreign technology companies. These draft Income Tax (Significant Economic Presence) Regulations, 2025, aim to broaden the tax base beyond the lapsed Digital Service Tax.
- Under the proposed rules, about 10% of a foreign firm’s gross turnover from Kenyan users would be considered taxable profit, subject to a 30% corporate income tax, resulting in an effective 3% levy on revenues.
- The KRA plans to target companies like Netflix, Amazon, OpenAI, Airbnb, and Uber, broadening the scope of taxable services to include cloud computing, online education, ride-hailing, and digital asset exchanges.
- This unilateral tax approach by Kenya, while aligning with the global debate under the OECD’s Pillar One framework, risks friction with countries like the U.S. and Europe, which have expressed concerns about such taxes.
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Kenya Proposes New Regulations Across Tax, Finance, and Power Sectors - September 2025
The Kenya Revenue Authority (KRA) is proposing new regulations, the Income Tax (Significant Economic Presence) Regulations, 2025, to compel Kenyan banks to withhold taxes for non-compliant foreign technology firms. In the financial sector, thirty-five SACCOs face sanctions for failing to register with the Financial Reporting Centre (FRC) under new anti-money laundering regulations. This crackdown is part of Kenya's effort to address its "grey listing" by the Financial Action Task Force (FATF). Additionally, new customer service standards are set for the power industry through the Draft Energy (Electricity Reliability, Quality of Supply and Service) Regulations, 2025. These regulations aim to enhance accountability and improve customer experience for the electricity sector.
