Bolt reacts to new tax proposal in Kenya

Kenya's Parliament is currently in the process of considering the implementation of a new tax proposal that has raised concerns among non-resident corporations operating within the country's digital realm. The 6 per cent Significant Economic Presence (SEP) tax, as outlined in the Finance Bill of 2024, is designed to target foreign firms engaging in commercial activities in Kenya's digital marketplace. Amidst this proposed tax, ride-hailing giant, Bolt, has expressed apprehensions regarding the potential impact on its operations and the broader business environment. Weyinmi Aghadiuno, the Acting Head of Regulatory & Policy Africa at Bolt, recently shared insights on the possible implications of this tax with CNBC Africa. The interview shed light on the challenges that the introduction of the SEP tax could pose for Bolt, its pricing strategies, and the livelihoods of drivers on its platform. Aghadiuno emphasized that the tax increase could lead to higher costs, potentially resulting in increased prices for customers and affecting the earnings of drivers. The company's concern is not only centered around the financial burden but also the overall impact on the ride-hailing sector and the business environment in Kenya. Bolt's engagement with the National Assembly showcased the potential repercussions of the SEP tax on various sectors of the economy, urging lawmakers to reconsider the proposal and maintain the current digital service tax rate of 1.5 per cent. Aghadiuno highlighted the need for harmonization in tax structures across East Africa to ensure a conducive environment for businesses and foreign investment. Furthermore, the interview delved into the specific challenges that Bolt could face if the SEP tax comes into effect, particularly in terms of the pricing and availability of lower-cost rides. Aghadiuno explained that the tax on income would impact all trips regardless of distance, but the significant impact would be felt by customers opting for lower-cost trips, potentially leading to a restructuring of pricing strategies. As Bolt navigates the potential implementation of the SEP tax, the company is preparing to reassess its operational strategies, evaluate cost structures, and potentially make price adjustments to maintain economic viability while continuing to provide value services to its customers. Despite the impending challenges, Bolt remains committed to engaging with the government constructively in search of a mutually beneficial solution. Aghadiuno's assurance of the company's dedication to continuing operations in the market emphasizes Bolt's perseverance in the face of regulatory changes and its determination to overcome obstacles in the evolving business landscape.