Kenya High Court Rules Platforms Liable for VAT: Major Impact on Gig Economy and Digital Services

Kenya High Court determines that digital platforms are liable for VAT on full customer charges

High Court Ruling on VAT Liability: On October 23, 2025, the High Court ruled in Commissioner v. Sendy Limited that digital platforms exercising significant control over transactions are considered principal suppliers for VAT purposes, making them liable for VAT on the full customer payment rather than just their commission.
Private Rulings Not Binding: The court clarified that a private ruling from the Kenya Revenue Authority cannot override a court’s statutory interpretation, meaning that taxpayers can no longer rely solely on private rulings to manage their VAT liabilities.
Implications for Digital Platforms: This ruling impacts various sectors in Kenya, including logistics, ride-hailing, and e-commerce, prompting digital platforms to reassess their VAT compliance practices and consider the implications of the court’s interpretation on their operations.

Source EY

Kenya’s High Court ruled that digital platforms like Sendy are principal suppliers, not just marketplaces, making them liable for VAT on the full customer payment.
Platforms are now designated as VAT withholding agents, shifting tax compliance and reporting obligations directly to them.
The decision is expected to reshape digital platform business models, affect pricing and contracts, and may support future gig worker re-classification.
The ruling overturned a previous tribunal decision, allowing the Kenya Revenue Authority to recover significant unpaid VAT from Sendy.
The degree of control exercised by platforms was key in determining VAT liability, setting a precedent for the broader gig and digital economy in Kenya.

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