Journey-hailing apps Uber and Bolt have argued that their Kenyan operations could also be unsustainable if the nation’s parliament approves the 6% Vital Financial Presence Tax (SEP) proposed within the Finance Invoice 2024.

“By introducing the 6% Vital Financial Presence Tax, the efficient charge for a non-resident within the digital market area will likely be 22% on gross turnover with out bearing in mind the working prices,” George Abasy, Bolt’s public coverage supervisor, instructed a parliamentary committee on finance and planning.

Celia Kuria, Bolt’s tax supervisor, instructed parliament that the tax opinions would push earnings from taxi rides that price lower than KES500 to a internet loss. The apps, utilized by city and peri-urban dwellers, largely cowl brief journeys.

The Finance Invoice 2024 has proposed a 6% SEP tax on gross turnover for all non-resident corporations, which the 2 digital taxi corporations instructed parliament will hike their operational prices. Showing earlier than a parliamentary committee on Wednesday, representatives from Uber, a US-based firm, and Bolt, an Estonian experience app, warned that SEP pushed out international corporations in Nigeria and can do the identical in Kenya.

The trade specialists warned that elevated taxation may eat into their razor-thin margins and drivers’ earnings, resulting in a complete collapse which may set off mass job losses in an economic system already battling excessive unemployment charges.

Uber urged the Nationwide Meeting to reject the proposals by the Nationwide Treasury. President William Ruto’s administration’s push to boost extra income from new taxes to repay the nation’s debt and fund lofty marketing campaign guarantees like inexpensive housing.

“SEP, as proposed, doesn’t point out how a non-resident particular person will likely be deemed to have created a major financial presence in Kenya due to this fact turning into liable to tax in Kenya,” Chizeba Nnonyeh, Uber tax supervisor, instructed lawmakers.

Different trade associations just like the Kenya Association of Manufacturers (KAM) have additionally jumped into the controversy, urging the nation’s legislature to rethink the tax proposals together with SEP, eco-tax, VAT on banking charges, and better excise obligation on a number of items and companies.