Kenya Targets Tech Giants in New Revenue Drive

Kenyan lawmakers are proposing sweeping changes that would extend digital taxes to major technology players like Visa, Mastercard, and Microsoft. The move seeks to capture more revenue from the country’s rapidly growing digital economy.

The proposed Finance Bill 2026 broadens the definition of “royalty” under the Income Tax Act to include payments for various digital services—from payment card schemes to cloud infrastructure. This could affect banks, fintech companies, and startups that rely on these foreign technologies.

Key Changes Under Consideration

• Expanded definition of royalties: Would now cover payments linked to digital platforms, payment networks, software licenses, and related support fees
• Impact on financial institutions: Banks using Visa and Mastercard networks could face additional scrutiny over processing fees
• Software users affected: Companies relying on Microsoft, Oracle, or AWS may see higher costs if providers pass the tax burden
• Broader scope: The changes would apply to payments for software development, training, maintenance, and support—not just licensing fees

Implications for Kenya’s Digital Economy

The government argues these measures are necessary to increase revenue from a sector that has seen explosive growth in recent years. However, critics warn that excessive taxation could stifle innovation and deter investment in Kenya’s tech ecosystem.

This proposal follows previous tax introductions on digital services, online creators, and virtual assets—part of Kenya’s strategy to capture more value from its digital economy. The bill is currently open for public comment before parliament debates the final version.