Kenya recorded a sharp increase in tax revenue from foreign digital companies in the 2025/26 financial year. Collections nearly doubled to KSh1.61 billion following reforms that expanded the country’s digital tax framework.
The Kenya Revenue Authority (KRA) collected KSh1.609 billion from non-resident digital service providers in the year ended June 2026, representing a 99.4 percent increase from KSh807 million recorded a year earlier. The growth followed the Finance Act 2025, which broadened the Significant Economic Presence Tax and removed the KSh5 million annual income threshold.
The reforms extended the tax beyond digital marketplaces to income earned through the internet and electronic networks, bringing more foreign providers of streaming services, cloud computing, online advertising, software subscriptions and other digital services into the tax net.
The Significant Economic Presence Tax replaced the Digital Service Tax, which Kenya introduced in January 2021 before abolishing it at the end of 2023 amid concerns over double taxation and ongoing OECD-led global tax reforms.
KRA said the higher collections from digital companies contributed to a 10.6 percent increase in its overall revenue collection to KSh2.844 trillion in the 2025/26 financial year. The broader revenue growth was supported by strong performance in manufacturing, energy, financial services, ICT and trade.
According to the authority, expanded eTIMS coverage, greater system integration, artificial intelligence-supported compliance monitoring and increased use of third-party data also played a key role in improving tax compliance and boosting revenue collections.
