Kenya Expands Digital Tax Scope to Include Payment Systems, Software Services

Kenya's proposed Finance Bill 2026 expands "royalty" definition to cover payment card schemes, digital platforms, and software-related services, potentially increasing costs for foreign technology providers like Visa, Mastercard, Microsoft, Oracle, and AWS. The move targets infrastructure powering digital commerce including payment processing systems, switching systems, and cloud services.

Under current law, royalties primarily cover copyright, patents, trademarks, and industrial equipment. The amendments would encompass proprietary digital platforms, payment networks, and software charges in the form of licenses, development, training, maintenance, or support fees. Banks using Visa/Mastercard networks and startups relying on foreign cloud infrastructure could face higher costs if providers pass on additional withholding taxes.

The proposal is part of Kenya's broader strategy to raise revenue from its digital economy after introducing taxes on digital services and online creators in recent years. Parliament has opened public participation with growing backlash from consumers, businesses, and investors over how far digital taxation can go without slowing growth of a tech sector Kenya has promoted as a regional innovation engine. Will this policy push African governments toward similar digital taxation models, or will Kenya face significant business exodus as a result?

SOURCE: https://techcabal.com/2026/05/13/kenya-moves-to-tax-card-networks-and-software-giants/