The consultation is set to conclude on 7 October 2025. 

The Kenya Revenue Authority (KRA) has initiated a public consultation on the released Draft Income Tax (Significant Economic Presence Tax) Regulations 2025, on 22 September 2025.

These proposed regulations aim to clarify how Kenya’s recently introduced significant economic presence (SEP) tax will be implemented.

Stakeholders and the public have until 7 October 2025 to submit their comments on the draft regulations.

In December 2024, Kenya introduced the SEP tax on nonresident persons earning income from services provided via digital marketplaces, replacing the previous 1.5% digital services tax. Under the Finance Act 2025, effective 1 July 2025, the SEP tax scope expands to cover services provided through any internet or electronic network, and the prior KES 5 million threshold is removed, making the tax applicable from the first qualifying sale.

Application of significant economic presence tax

  • Significant economic presence tax shall apply to the income of a non-resident person derived or accrued in Kenya from the provision of services through a business carried out over the internet or an electronic network, including through a digital marketplace.
  • A person shall be deemed to have significant economic presence in Kenya where the user of the service is in Kenya.
  • Significant economic presence tax shall be a final tax.

Scope of taxable services

Significant economic presence tax shall be applicable on the following services;

  • Downloadable digital content, including downloadable mobile applications, eBooks and films;
  • subscription-based media, including news magazines and journals;
  • streaming, listening, viewing or playing online digital content on any audiovisual or electronic media, including television shows, films, music, games, podcasts, webcasts and similar content;
  • software programmes including software, drivers, website filters and firewalls;
  • electronic data management, including cloud computing services, website hosting, online data warehousing, file sharing and similar services;
  • search engines and automated helpdesk services;
  • artificial intelligence services;
  • ticketing services for events, theatres, restaurants and similar services;
  • online education programmes including distance teaching programmes through prerecorded media, eLearning, education webcasts, webinars, online courses and training services tailor-made to suit the learners’ program;
  • services that link the supplier to the recipient, including platforms for transport hailing, online travel, rental and accommodation marketplaces and any other platforms that facilitate the provision of services, goods or property;
  • transmission of data collected about users, which has been generated from such users’ activities on a digital marketplace, however monetised;
  • facilitation of any online payment, including money transfer services and exchange or transfer of digital assets;
  • any other service carried out over the internet or an electronic network, including through a digital marketplace that is not exempt under the Act.

Determination of user location

A user of a service shall be deemed to be located in Kenya if any of the following parameters are present:

  • The user accesses the digital interface through telecommunication or electronic devices from a terminal located in Kenya.
  • Payment for the services is made using a credit or debit facility provided by any financial institution or company in Kenya.
  • Services are acquired using an internet protocol address registered in Kenya or an international mobile phone country code assigned to Kenya; or
  •  The user has a business, residential or billing address in Kenya.

Exemption from significant economic presence tax 

For these Regulations, the significant economic presence tax shall not apply to:,

  • a non-resident person who offers the services through a permanent establishment in Kenya;
  • income chargeable under section 9(2) or under section 10 of the Act;
  • a non-resident person providing digital services to an airline in which the government of Kenya has at least 45% shareholding.

Computation of tax 

  • For the purposes of computing the tax under these regulations;
    • The taxable profit of a person liable to pay the tax shall be deemed to be ten per cent of the gross turnover; and
    • The rate of tax shall be thirty per cent of the deemed taxable profit.
  • Gross turnover shall be the income of a nonresident person derived from or accrued in Kenya through a business carried out over the internet or an electronic network, including through a digital marketplace, and
    • In the case of the provision of the services, the payment received as consideration for the services; and
    • In the case of a digital marketplace, the commission or fee paid to the digital marketplace provider for the use of the platform.
  • The gross turnover shall not include the value added tax charged for the service.