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Kenya: Digital Service Tax


published on 12 April 2021 | reading time approx. 3 minutes


Digital Service Tax (DST) is a tax charged on income derived or accrued from provisions of services through a digital market place. DST will be charged on the gross transaction value of the service on the payment received as consideration for the service.



In the case of use or utility of a digital market place, the commission or fee paid to the digital market place for use of the platform will be the taxable amount. DST is applicable to both Kenyan tax residents and non-residents at the 1.5%.  This regulation came into effect from 1st January 2021.

A digital market place refers to a platform that enables the direct interaction between buyers and sellers of goods through electronic means. A platform on the other hand refers to any electronic application that allows service providers to be connected to users of the services; directly or indirectly and includes a website and mobile application.

DST is/will be applicable in cases where the digital service or supply on a digital market place is provided to a user located in Kenya. 

The following are the parameters used to determine whether a user is located in Kenya;
  • Payment of the digital services is made using a credit or debit facility provided by any financial institution or company in Kenya.
  • The user accesses the digital interface from a terminal located in Kenya.
  • The supplies or digital services are acquired using an internet protocol address registered in Kenya or an international mobile phone country code assigned to Kenya.
  • The user has a business, residential or billing address in Kenya.

The scope of taxable items under DST are also as follows;
  • Downloadable digital content including downloadable mobile applications, e-books and films;
  • Over-the-top services including streaming television shows, films, music, podcasts and any form of digital content;
  • Sale of, licensing of, or any other form of monetizing data collected about Kenyan users which has been generated from the users’ activities on a digital marketplace; 
  • Subscription-based media including news, magazines and journals;
  • Electronic data management including website hosting, online data warehousing, file-sharing and cloud storage services;
  • Electronic booking or electronic ticketing services including the online sale of tickets; 
  • Provision of search engine and automated help desk services including supply of customized search engine services; 2252 Kenya Subsidiary Legislation, 2020; 
  • Online distance training through pre-recorded media or e-learning including online courses and training; and
  • Any other service provided through a digital marketplace.

DST is/however NOT applicable in the below areas;
  • Online services provided by government institutions;
  • Online services which facilitate payments; 
  • Lending or trading of financial instruments, 
  • Commodities or foreign exchange services carried out by a financial institution and a financial services provider licensed and approved by the CBK;
  • All income specified in sections 9(2) and 35 of the Kenya Income Tax Act (ITA) will also not be liable for DST liability. 


The Government appears to have tapped into  a tax base that had been in existence for quite some time. The use of digital avenues to transact and earn livelihoods including social media platforms has  been on the rise in recent times. Income that had been generated through such  avenues wasn’t being taxed and by bringing it to the tax bracket, the government is likely to witness increased tax revenue.

The Government is similarly following global trends in the taxation of DST .  As at October 14 2020, Austria, France, Hungary, Italy, Poland, Spain, Turkey and the United Kingdom had implemented DST. Others such as Belgium and the Czech republic have published proposals to enact it.

In Kenya, the anticipation now is that a review by the Government on the successes and failures of in the implementation and administration. This will include future proposals to make tax compliance easier and clearer.
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