Digital Services Tax in Kenya: Who Pays It and How

By Avatechtax Team — Avatechtax Consultancy

Kenya's Digital Services Tax (DST) took effect on 1 January 2021, imposing a 1.5% tax on the gross transaction value of digital services supplied in Kenya by non-resident persons. It was subsequently revised and integrated into the broader Significant Economic Presence (SEP) tax framework in the Finance Act 2023.

What Counts as a Digital Service?

DST covers: streaming services (Netflix, Spotify), online marketplaces (Amazon, Jumia's international sellers), downloadable software, subscription-based digital content, cloud services, and digital advertising. If your customers are in Kenya and you have no physical office here, DST may apply.

Implications for Local Businesses

Kenyan businesses purchasing digital services from non-resident suppliers are required to self-assess and remit withholding tax on those payments. Buying a Zoom subscription, Google Ads services, or Adobe licenses? 5.6% WHT applies (DST 1.5% + VAT reverse charge mechanism). Failure to withhold is a liability — you pay the tax, not the foreign supplier.

How to Stay Compliant

Register as a WHT agent on iTax
Deduct and remit WHT by the 20th of the following month
Obtain WHT certificates from KRA and share with your foreign supplier
Claim input WHT in your income tax return

Digital taxation is complex and evolving. Avatechtax's tax team monitors regulatory changes and ensures your business stays compliant. Explore our tax packages.

Digital Services Tax in Kenya: Who Pays It and How

By Avatechtax Team — Avatechtax Consultancy

Our annual guide to financial planning for the new financial year — budgeting frameworks, tax calendar, and growth strategies.

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