Kenya: Revenue Authority opened consultation on Draft Income Tax (Significant Economic Presence Tax) Regulations

On 22 September 2025, the Revenue Authority (KRA), on behalf of the Cabinet Secretary for the National Treasury and Economic Planning, opened a consultation, until 7 October 2025, on the Draft Income Tax (Significant Economic Presence Tax) Regulations, 2025. The draft regulations, developed under Section 12E(6) of the Income Tax Act (Cap. 470) and the Statutory Instruments Act (Cap. 2A), establish the framework for applying significant economic presence tax to non-resident persons deriving income in Kenya from services delivered over the internet or electronic networks, including through digital marketplaces. They define taxable services such as digital content, streaming, subscription media, software, cloud computing, artificial intelligence, online education, data transmission, and digital payments. The draft introduces registration and compliance procedures under the Tax Procedures Act (Cap. 469B), deems taxable profit as 10% of gross turnover taxed at 30%, and specifies the tax as final. It also sets rules for determining user location, appointing tax representatives, filing returns, and maintaining records. Further, it includes penalties and interest under the Tax Procedures Act, transitional provisions for entities registered under the Income Tax (Digital Service Tax) Regulations, 2020, and revokes those Regulations (L.N. 207/2020).