Wednesday, April 30, 2025 - In a bid to reduce the cost of living and spur growth in the digital economy, the Government has proposed sweeping tax relief measures in the Finance Bill 2025.
Key among the proposed changes is the scrapping of the 1.5%
Digital Service Tax (DST), which currently applies to income earned by
non-resident companies offering digital services in Kenya.
These include Netflix, Facebook Marketplace, and other
online platforms.
The DST is charged on gross transactional value, excluding
VAT, and targets businesses without a physical presence in the country.
With more Kenyans relying on digital platforms for shopping,
entertainment, and business, the removal of DST could lead to lower costs for
everyday online services and purchases.
Additionally, the Government has proposed reducing the tax
on crypto transactions from 3% to 1.5%, a move aimed at encouraging innovation
and investment in fintech.
According to the Cabinet’s official statement, these digital economy tax
reliefs are in line with the Government's plan to prioritise sealing loopholes
in existing tax measures instead of introducing new ones to lower the cost of
living.
Analysts suggest the tax cuts are also a strategic move to
win over Gen Zs, who are the primary consumers of digital services.
This tech-savvy generation has been a persistent force of
dissent, especially after the 2024 Finance Bill protests that shook President
Ruto’s administration to its core.
The Kenyan DAILY POST
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