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Billions online taxi & delivery services are making in Kenya

From ferrying passengers to fuelling the economy, Kenya’s digital taxi and delivery apps like Uber, Bolt, and LittleCab are now raking in billions
Billions online taxi & delivery services are raking in Kenya
Billions online taxi & delivery services are raking in Kenya

Kenya's digital taxi and delivery services, including prominent players like Uber, Bolt, LittleCab, Glovo, and INDriver, have rapidly become a significant part of the economy, generating billions of shillings in revenue.

In the financial years 2022/2023 and 2023/2024, the Kenya Revenue Authority (KRA) reported that the sector generated over Sh16 billion. 

This revenue is a mix of what companies like Uber and Bolt earn through their services, as well as taxes collected from both the businesses and individual drivers involved in the digital economy.

Revenue Collected from Ride-Hailing Services

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Revenue and taxes by digital taxi and delivery services in Kenya

The Tax System for Ride-Hailing Services

Kenya’s tax system for digital taxi services is multifaceted. The companies themselves are subject to VAT and Income Tax, while individual drivers are subject to Income Tax based on their earnings. 

Additionally, the Digital Services Tax (DST) was introduced in 2021 to ensure that non-resident digital platforms also pay their fair share of taxes for their services rendered in Kenya. 

Both Uber and Bolt, which are non-resident digital service providers, comply with this tax by remitting payments to KRA on behalf of their drivers.

The inclusion of DST and VAT on transactions by users of these platforms ensures that ride-hailing services contribute to Kenya’s public coffers. 

Billions online taxi & delivery services are raking in Kenya

While the rates for taxes vary, the government's intention is to regulate the growing digital economy effectively. In particular, non-resident digital services, such as Uber and Bolt, have had to comply with DST since January 2021.

For example, LittleCab, another ride-hailing service, has generated substantial revenue, with Sh1.15 billion in gross income in 2022/2023 and Kshs. 1.45 billion in 2023/2024. 

Though LittleCab did not contribute to DST in 2022/2023, it did pay Sh1.4 million in Corporation Tax in the following year. 

This highlights the broader participation of smaller players in the market, although they contribute less than giants like Uber and Bolt.

Challenges in Tax Compliance and Emerging Issues

Despite the substantial revenue generated, Kenya’s digital taxi sector faces significant challenges, particularly around tax compliance. 

The sector, considered part of the informal digital economy, lacks clear visibility, making it difficult for tax authorities to track earnings accurately. 

Most operators in this space are small or micro-enterprises, and many are not fully aware of their tax obligations.

To address this, KRA has recommended increased taxpayer education and sensitisation. 

KRA headquarters at Times Tower, Nairobi

The government, through KRA, is seeking to raise awareness among both the platforms (like Uber and Bolt) and the drivers, ensuring they understand their tax duties. 

This initiative includes training programs and public awareness campaigns to promote better compliance.

The integration of telecommunication companies (Telcos), financial institutions, and payment service providers (PSPs) into the tax system is another proposed solution. 

These collaborations would help collect data on non-resident digital service providers and facilitate tax compliance. 

Additionally, e-invoicing for ride-hailing services, though challenging due to the informal nature of the sector, remains a key goal for KRA to ensure proper tax collection.

The Future of Digital Taxi Services in Kenya

The growth of digital taxi services in Kenya reflects broader global trends, with more people opting for convenient, tech-driven transport solutions. 

As the sector continues to grow, the Kenyan government aims to further regulate the industry, ensuring it contributes more effectively to the national economy.

However, challenges remain. KRA has highlighted the need for the government and digital taxi companies to work together to resolve compliance issues and simplify the tax process for drivers. 

If successfully implemented, these efforts would not only boost the government’s revenue but would also ensure that the sector remains sustainable in the long run, benefiting both the drivers and the passengers.

Digital taxi services in Kenya

In conclusion, Kenya’s digital taxi services have become an essential part of the economy, contributing billions in revenue and taxes each year. 

Despite the challenges, efforts to improve tax compliance, increase transparency, and regulate the sector show promise in securing a more efficient and effective future for this rapidly growing industry.

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