Kenya, 29 October 2025 - Kenya’s High Court has delivered a landmark ruling with far-reaching implications for the country’s digital and gig economy.
The court ordered the now-defunct logistics firm Sendy Limited to pay KSh 82.2 million in Value Added Tax (VAT), marking a decisive shift in how tech platforms may be taxed in Kenya.
In her 23 October 2025 ruling, Justice Helene Namisi found that Sendy was not merely a digital intermediary, but the principal provider of delivery services.
This finding challenges a long-standing argument used by gig economy platforms which often claim to be “just technology platforms” connecting independent service providers with customers.
The legal dispute centered on whether Sendy acted as a principal supplier or simply as an agent linking customers to delivery riders.
Sendy maintained it was only a technology platform and should therefore pay VAT on the commission it earned, not the total value of each transaction.
Initially, the Tax Appeals Tribunal agreed with Sendy’s position.
However, Justice Namisi overturned that decision, ruling in favor of the Kenya Revenue Authority (KRA).
The court found that Sendy had “a decisive degree of control over the essential elements of the delivery service.”
Sendy set delivery terms, authorized transactions, and received payments in its own name, all indicators of a principal supplier rather than a passive intermediary.
As a result, the court held that VAT applies to the full amount paid by customers, not just the platform’s commission.
For tax purposes, Sendy was deemed to have received the transport service from riders and then supplied it to customers, making it liable for VAT on the gross transaction value.
This precedent could reshape the taxation landscape for Kenya’s fast-growing gig economy. Platforms that have operated under the “agent model” may now face similar VAT assessments on total transaction values, not just their commissions.
The ruling empowers the KRA to demand substantial back taxes from major digital platforms, potentially increasing their operational costs. Companies like Uber, Bolt, and Glovo may have to either absorb the 16% VAT, squeezing already thin profit margins, or pass the cost to consumers, resulting in higher fares and delivery fees.
Furthermore, gig workers, drivers and riders, could also feel the impact. If companies choose to offset higher taxes by cutting payouts, their earnings could decline.
Ultimately, this ruling challenges the foundational business model that has fueled the rise of Kenya’s gig economy.
Its ripple effects are expected to be felt across the sector, prompting platforms to rethink their tax strategies and operational structures for years to come.
