Kenya\u2019s digital platforms are about to get a lot more expensive to run. A High Court decision just ruled that taxi apps, delivery services, and e-commerce platforms must collect and pay the full 16% VAT on every transaction that goes through their systems \u2013 not just on their commission.<\/p>\n
This all started with Sendy, the now-defunct<\/a> logistics startup that connected customers with delivery drivers. The Kenya Revenue Authority<\/a> came after them for KES 82 million in VAT.<\/p>\n Sendy argued they were just a tech platform, a digital middleman who brought transporters and customers together. They said the actual transport service was provided by independent drivers, so they should only pay VAT on their slice of the fee.<\/p>\n The Tax Appeals Tribunal initially agreed with Sendy, but the High Court was not convinced.<\/p>\n Justice Helene R. Namisi looked at what Sendy<\/a> actually did: they set the prices, they approved the deliveries, they collected all the money in their own name, and they controlled how the whole thing worked. The court said that when you control that much of a transaction, you\u2019re not just connecting people but providing the service yourself.<\/p>\n For tax purposes, Sendy was receiving the transport service from drivers and then selling it to customers. That means VAT applies to the full amount customers paid, not just Sendy\u2019s cut.<\/p>\n This is going to ripple through Kenya\u2019s entire platform economy. Digital taxi services like Uber, Bolt, and Little Cab have spent years insisting they\u2019re technology companies, not transport companies.<\/p>\n Same story with delivery apps like Glovo and online marketplaces like Jumia<\/a> and Kilimall. They all say they just connect independent service providers with customers through an app.<\/p>\n However, the court\u2019s logic doesn\u2019t care what you call yourself. If you set the terms, control the pricing, collect the payments, and dictate how things work, you\u2019re in the driver\u2019s seat. And if you\u2019re in the driver\u2019s seat, you\u2019re responsible for the tax on the whole transaction.<\/p>\n Kenya\u2019s e-commerce revenue was expected to hit about KES 146 billion in 2024, with over 12 million users. That\u2019s a lot of transactions that could now be taxed differently.<\/p>\n The 2023 Finance Act already expanded the definition of \u201cdigital marketplace\u201d to cover any platform facilitating taxable supplies, and this ruling just gave that law some real bite.<\/p>\n This isn\u2019t a Kenyan problem, though, as UK courts ruled that Uber<\/a> drivers are workers entitled to minimum wage and benefits, rejecting the company\u2019s claim that it was just a tech intermediary.<\/p>\n Courts globally have been poking holes in the \u201cwe\u2019re just an app\u201d defense when platforms clearly control how services are delivered and what customers pay.<\/p>\n For platforms operating in Kenya, this changes everything. They need to register for VAT if they haven\u2019t already. They need to collect tax on the full customer payment. And if authorities decide to also classify them as employers down the line, they could be on the hook for income tax withholding, pension contributions, and health insurance payments.<\/p>\n