Guide - Digital Tax
Significant Economic Presence (SEP) Tax Kenya Guide 2026
If you've heard that Kenya is now taxing foreign platforms like ride-hailing apps, streaming services, or cross-border e-commerce sellers — this is the tax behind it. SEP replaced the old 1.5% Digital Service Tax, and as of 2026 it applies from the very first shilling of qualifying revenue, with no minimum threshold. Here's what it actually means, and who it affects.
What Is SEP Tax?
The Significant Economic Presence (SEP) tax is an income tax charged on non-resident persons who earn income from Kenyan users through a business carried out over the internet, an electronic network, or a digital marketplace — even if that business has no physical office in Kenya.
It replaced the 1.5% Digital Service Tax (DST) in December 2024, and the Finance Act 2025 broadened its scope to cover any internet or electronic-network service, not just transactions on a digital marketplace platform.
How Much Is It?
SEP is charged at 30% of deemed taxable profit, where deemed taxable profit is calculated as 10% of gross Kenyan-derived turnover. Worked through:
- 10% of gross turnover = deemed taxable profit
- 30% of that deemed profit = tax due
- Net effect: 3% of gross Kenyan revenue
Example: a platform earning KES 10 million from Kenyan users in a period calculates deemed profit at KES 1 million (10%), then pays 30% of that = KES 300,000 — 3% of the original KES 10 million.
There is no minimum revenue threshold. Earlier versions of the rules exempted small amounts; that threshold was removed, so even low-value cross-border transactions are technically in scope.
The tax and the 3% rate are already in force under the Tax Laws (Amendment) Act 2024 and Finance Act 2025 — separate draft regulations published in September 2025 are refining the administrative mechanics (registration and filing details). If you're implementing compliance around this, confirm those regulations' current finalization status, since the substantive tax itself doesn't depend on them being finished.
Who Has to Pay It
Non-resident persons without a permanent establishment in Kenya, earning income from Kenyan users through:
- Digital marketplaces and app-based platforms (ride-hailing, delivery, freelance marketplaces)
- Streaming and subscription services
- Cross-border e-commerce sellers and marketplace facilitators
- Any service provided over the internet or an electronic network to a Kenya-based user — this scope is broader than just “marketplace” platforms
Registration is via a simplified framework, or by appointing a local tax representative. Filing and payment are monthly, due by the 20th of the following month.
What This Means If You're a Kenyan Freelancer or SME
SEP is not directly your tax if you're Kenya-resident — your own income is taxed under normal individual or corporate rules. But it affects you in practice if:
You get paid by a non-resident platform or client
That platform's own SEP exposure has increased data-matching pressure from KRA, and some platforms may ask you for documentation or adjust how they handle payments as a result.
You sell through, or compete with, foreign marketplace sellers
For example cross-border sellers on platforms shipping directly to Kenyan buyers — their tax exposure has changed, which can affect pricing and how local resellers position against them.
You run a platform or app yourself
With foreign revenue flows — check whether your own structure triggers SEP obligations on the non-resident side of your business.
Common Mistakes
Assuming SEP is “someone else's tax” if you're a small Kenyan business
If you're the resident party, it usually is. But if any part of your revenue flows through a non-resident platform or entity, it's worth checking who's actually liable and whether it changes your own documentation needs.
Confusing SEP with VAT on digital services
These are separate regimes. See our VAT on digital services guide for the VAT side — SEP is an income tax on the non-resident's profit, not a consumption tax on the buyer.
Assuming there's still a minimum threshold
There isn't, as of the 2026 rules. Even small cross-border transaction volumes are technically in scope for the non-resident provider.
For the VAT side, see our VAT on digital services guide.
Frequently Asked Questions
What is SEP tax in Kenya?
Significant Economic Presence tax — an income tax on non-resident businesses earning income from Kenyan users over the internet or a digital marketplace, even without a physical presence in Kenya. It replaced the 1.5% Digital Service Tax in December 2024.
What is the SEP tax rate?
Effectively 3% of gross Kenyan-derived revenue — calculated as 30% tax on a deemed profit of 10% of gross turnover.
Is there a minimum threshold for SEP tax?
No. An earlier revenue threshold was removed, so SEP applies from the first qualifying transaction.
Does SEP tax affect me if I'm a Kenyan resident?
Not directly — your own income stays under normal resident tax rules. It matters to you indirectly if you're paid by, sell through, or compete with a non-resident digital platform.
How is SEP tax different from VAT on digital services?
SEP taxes the non-resident provider's income. VAT on digital services is a separate consumption tax that can apply to the same transaction. They're both real, both current, and neither replaces the other.
Who registers and files SEP tax?
The non-resident service provider — either through a simplified registration framework or by appointing a local tax representative — with monthly filing and payment due by the 20th of the following month.
Need Help Understanding Your Tax Position?
Whether you're being paid by a foreign platform or trying to work out your own compliance obligations, we can help you make sense of it.