KENYA Law and Practice Contributed by: Ombo Malumbe, Jack Ong’anya and Faith Ngarama O’Bang Law (Ong’anya Ombo Advocates LLP)
9.11 Country-by-Country Reporting and Transparency Provisions Transparency is now absolute due to the KES95 billion threshold for CbC reports. The KRA uses this data to map out “low-tax” hubs in a group’s structure. Failure to file can lead to penalties of KES1 million or impris - onment. Large taxpayers must file the master file and local file within six months of the group’s financial year-end. 9.12 Digital Economy Businesses The tax landscape for digital assets changed drastical - ly in July 2025. The 3% digital asset tax was repealed and replaced with a 10% excise duty on service fees charged by VASPs. This shifted the burden from the total transaction value to the platform’s commission, making the environment more investor-friendly while still capturing revenue. 9.13 Approach to Digital Services Taxation The SEP tax replaced the 1.5% DST in late 2024. As of 2026, it is a final tax of 3% on gross turnover for non-residents providing services through a digital marketplace with annual Kenyan turnover exceeding KES5 million.
However, under the Finance Act, 2025, the scope was expanded to cover all income derived by non- residents from services provided via the internet or any electronic network, and the KES5 million thresh - old was removed entirely, meaning that even a single qualifying digital sale to a Kenyan user now triggers SEPT. The effective tax rate is 3% on gross turnover, computed by deeming 10% of gross turnover as tax - able profit and applying the 30% corporate tax rate. 9.14 Offshore IP Provisions The Kenyan government has expressed interest in determining the value of IP for the purposes of bet - ter taxation. One solution is a preferential tax to be applied on IP (currently law: see 2.2 Technology Investments ). On the other hand, the Cabinet Secre - tary of the National Treasury and Economic Planning recently proposed new Transfer Pricing Rules, 2023, which should replace the Transfer Pricing Rules, 2006 (see 9.10 Transfer Pricing and IP Taxation ).
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