Watching Netflix or Shopping on Amazon? KRA Might Make You Pay Their Taxes

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Kenya’s tax authority is preparing a radical enforcement tactic that could see ordinary citizens turned into tax collectors for some of the world’s largest technology firms.

The Kenya Revenue Authority (KRA) is moving to enforce the Significant Economic Presence (SEP) tax, which directly targets foreign companies such as Netflix and Amazon that earn revenue from Kenyan consumers but lack a physical footprint in the country.

How the SEP Tax Works

The SEP tax applies to non-resident companies that generate income from Kenya through digital services. These include streaming subscriptions, cloud storage, online marketplaces, and other digital transactions.

Instead of relying on local offices or branches, which many global platforms do not have, the law assumes that 10% of their gross turnover from Kenya represents taxable profit. That profit is then taxed at the standard 30% corporate income tax rate, creating an effective levy of about 3% on gross revenue.

For context, Netflix has over 100,000 subscribers in Kenya, each paying up to KSh 1,100 monthly. This translates into millions of shillings in annual revenue that could now fall under KRA’s tax net. Amazon’s growing e-commerce sales into Kenya are also expected to be captured under the new regime.

Draft 2025 regulations expand the coverage even further, potentially including artificial intelligence tools like ChatGPT, and ride-hailing apps such as Uber and Bolt.

From DST to SEP: Why the Change?

The SEP tax replaced Kenya’s earlier Digital Services Tax (DST), introduced in 2021. DST was a flat 1.5% levy on gross turnover of non-resident digital providers. However, enforcement proved difficult, as many global companies ignored the requirement due to the lack of physical operations in Kenya.

This left KRA with losses estimated in billions of shillings every year.

To address this gap, Parliament repealed DST in December 2024 and introduced the SEP tax through the Tax Laws (Amendment) Act. Unlike DST, SEP is profit-based and designed to align with OECD-inspired global standards for taxing cross-border digital businesses.

The new structure not only raises the effective rate to 3% but also strengthens compliance mechanisms.

Enforcement: Consumers Could Be Dragged In

What makes SEP stand out is its enforcement power. Under Section 42 of the Tax Procedures Act, the KRA commissioner can appoint “any person” as an agent responsible for deducting and remitting taxes. This includes banks, payment processors like M-Pesa intermediaries, and even ordinary consumers.

In practice, this means that if a company like Netflix fails to pay SEP tax, KRA could instruct your bank to withhold 3% of your subscription fee and remit it directly to the authority. If you pay directly, you could even be ordered to forward the money yourself. Failure to comply exposes appointed agents, including individuals, to penalties of up to 200% of the tax due.

KRA is also strengthening enforcement with international data-sharing agreements under the Common Reporting Standard (CRS), which give it better visibility into offshore accounts and cross-border transactions.

Impact on Kenya’s E-Commerce Market

Kenya’s e-commerce sector is booming, projected to reach US$1.35 billion in 2025, with global platforms dominating the space. Yet their tax contributions have been minimal. The SEP tax is KRA’s response to this imbalance, ensuring that companies benefitting from the Kenyan digital economy also contribute to public revenue.

Kenya’s e-commerce market value

But the cost could ultimately land on consumers. Streaming platforms may pass on the levy by raising subscription fees or introducing surcharges. Netflix’s basic plan, for instance, could rise above current rates. Amazon shoppers may face higher delivery or shipping charges, making cross-border purchases less attractive.

There are also concerns that involving consumers directly in tax collection will create administrative challenges. Imagine being required to prove to KRA that you withheld tax from your Visa card payment for a Netflix subscription.

Such complexities could push some users toward unregulated alternatives like VPNs or pirated content, undermining the growth of Kenya’s digital economy.

How Kenya Compares to Other African Nations

Kenya is not alone in pursuing taxes on digital platforms. Across Africa, several countries have introduced similar measures:

Tanzania imposes a 2% DST on payments for digital marketplace services provided by non-residents.
Uganda replaced its DST with a 15% withholding tax on non-resident digital income.
Nigeria levies a 6% DST.
Zimbabwe applies a 5% DST.
Sierra Leone charges 1.5% on digital services.

Kenya’s SEP model stands out because of its enforcement reach and its alignment with global tax standards, making it one of the most ambitious frameworks on the continent.

Jefferson Wachira is a writer at Africa Digest News, specializing in banking and finance trends, and their impact on African economies.