UBER AND BOLT THREATEN TO EXIT KENYA OVER NEW TAXES
Kenya’s National Treasury is poised to introduce a significant change in taxation, with plans to implement a 6% Significant Economic Presence Tax (SEP) on the gross turnover of non-resident firms operating in digital marketplaces, replacing the current 1.5% digital service tax.
In response to this proposed tax, representatives from Uber and Bolt recently presented their concerns before the National Assembly Committee on Finance and Planning. They argued that the imposition of the SEP tax could have dire consequences, potentially leading to the collapse of their operations in Kenya.
George Abasy, Bolt’s public policy manager, stated, “By introducing the 6% SEP, the effective tax rate for non-residents in the digital marketplace would skyrocket to 22% on gross turnover, without considering operational costs. Such a tax hike could inevitably drive the industry towards insolvency due to the resulting losses or diminished profit margins.”
Celia Kuria, Bolt’s tax manager, highlighted that the proposed tax revisions would result in taxi rides costing less than KES500 operating at a net loss.
Echoing these sentiments, Uber’s director, Blair Bradford, represented by the company’s tax manager, Chizeba Nnonyeh, urged the committee to reconsider its decision to repeal the digital service tax.
Nnonyeh stressed the importance of clarity in the SEP proposal, particularly concerning how non-resident entities would be deemed to have a significant economic presence in Kenya, thereby becoming subject to taxation.
Uber and Bolt Becry New Taxes
In addition to the SEP tax, the Treasury is also proposing a 2.5% motor vehicle tax on all car owners, aiming to generate over KSh 58 billion in revenue. However, this proposal has sparked widespread resistance from Kenyans and insurance firms alike, who are concerned about its potential ramifications.
The looming threat of increased taxation has cast a shadow over the future of Uber and Bolt in the Kenyan market. Should these tax measures be approved by Members of Parliament, both ride-hailing companies may be compelled to withdraw their services from the country.
The exit will cumulatively affect hundreds of thousands of Kenyan drivers and passengers who rely on the cab-hailing companies.
By Vivian K.
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