Kenya is looking to collect more money from the digital world. In the new Finance Bill 2026, the government has proposed a major tax overhaul that targets global tech giants like Visa, Mastercard, and Microsoft.
By changing the rules on what counts as a “royalty,” the government aims to tap into the billions of shillings flowing out of the country for software and payment services.
What Exactly is Changing?
In the past, “royalties” (money paid for using someone else’s property) mostly applied to things like books, music, or basic software licenses. The new bill expands this definition significantly.
Now, the government wants to tax payments made for:
• Payment Networks: The systems used by Visa and Mastercard to process your card swipes.
• Cloud & Software: Services from companies like Microsoft, Oracle, and Amazon Web Services (AWS).
• Support Services: Fees paid for training, maintenance, and tech support for these platforms.
Why This Matters to You
While the tax is aimed at big international companies, the “trickle-down” effect could hit the average Kenyan’s pocket in several ways:
1. More Expensive Banking: If banks have to pay more tax to use Visa or Mastercard networks, they may increase transaction fees for customers.
2. Higher Costs for Startups: Kenya is known as “Silicon Savannah” because of its many tech startups. These small companies rely on foreign software to run. If software costs go up, these businesses might struggle to grow.
3. Price Hikes on Apps: Subscriptions for cloud storage, work software, or digital tools could become more expensive if companies pass the tax cost onto the user.
The Big Debate: Revenue vs. Growth
The Kenyan government is under pressure to find new ways to raise money to pay off national debt. They see the digital economy as a massive, untaxed goldmine.
However, critics argue this move could backfire:
• Slowing Innovation: If it becomes too expensive to use modern tech, Kenya might lose its edge as Africa’s tech leader.
• Legal Battles: Global tech firms might challenge these taxes in court, arguing that they already pay taxes in their home countries.
What’s Next?
The Parliament has opened the floor for public participation. This means business owners, tech experts, and everyday citizens can voice their concerns before the bill becomes law. As the debate heats up, all eyes are on how Kenya will balance its need for cash with its goal of remaining a digital powerhouse.
