Ride-hailing companies Uber and Bolt are voicing strong opposition to the Kenyan government’s proposed new taxes, which could have far-reaching implications for the country’s transportation sector and digital marketplace.
Details
The Kenyan Government has proposed a 6% Significant Economic Presence Tax (SEP) on gross turnover for non-resident firms, as outlined in the Finance Bill 2024.
This move by the Kenyan government aims to increase revenue from digital services, but it has prompted a stern response from the two leading ride-hailing services, who argue that such a tax would severely impact their operations and financial viability in the country.
Digging Deeper
The ride-hailing companies contend that the SEP, as currently proposed, does not account for operating costs, which could push earnings from taxi rides below a sustainable threshold.
“By introducing the 6% Significant Economic Presence Tax, the effective rate for a non-resident in the digital market space will be 22% on gross turnover without taking into consideration the operating costs,” Bolt’s public policy manager, George Abasy said.
Possibility of Price Hikes
The potential repercussions of the proposed tax are significant. Both companies have warned that the increased taxation could lead to higher fares for consumers, reduced earnings for drivers, and possibly even the exit of these platforms from the Kenyan market.
The Kenya Association of Manufacturers (KAM) has joined the conversation, urging Kenya’s legislature to reconsider the tax proposals, which also include eco-tax, VAT on banking fees, and higher excise duty on several goods and services.
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