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Kenya’s gig-economy landscape may be entering a new era after a landmark decision this month. On October 23, 2025, the High Court of Kenya ruled that logistics startup Sendy Limited must pay KSh 82.2 million (about US$635,000) in value-added tax (VAT) to the Kenya Revenue Authority (KRA), finding that Sendy’s business model made it a service provider rather than merely a digital intermediary.
Justice Helene R. Namisi concluded that Sendy “exercises a decisive degree of control over the essential elements of the delivery service,” noting that the company sets terms, authorises and receives payments in its own name — effectively operating as a principal service provider.
This decision overturned a previous ruling by the Tax Appeals Tribunal, which had earlier sided with Sendy’s argument that it was only a platform connecting drivers to customers and should only pay VAT on commissions. The court, however, stated that the tribunal “erred in law” by ignoring the economic substance of how Sendy conducted its business.
The implications stretch far beyond Sendy. By classifying it as a principal rather than an intermediary, the court has paved the way for the KRA to pursue other digital platforms operating under similar models — including Uber, Bolt, Glovo, Little Cab, Jumia, and Kilimall.
Under the new interpretation, VAT would apply to the full transaction value paid by customers through a platform — not just the commission. This shift could increase operational costs for many gig-economy companies, who may in turn pass the costs to consumers or service providers.
Tax experts warn this could redefine the economics of digital services in Kenya, potentially raising prices for rides, deliveries, and online purchases.
For digital platforms accustomed to remitting VAT solely on commissions, the ruling poses both a legal and operational challenge. Businesses may now need to:
Analysts also fear that small-scale digital startups could struggle to adapt, as the increased compliance burden may deter innovation in Kenya’s rapidly growing digital economy.
Kenya remains one of Africa’s most dynamic digital economies. According to UNCTAD, e-commerce revenues are projected to reach KSh 145.8 billion (US$900 million) in 2025, with over 12 million active online users.
The Sendy ruling underscores the Kenyan government’s determination to tap into the expanding digital ecosystem for revenue. It also mirrors international trends — including rulings in the UK, EU, and India — where courts have rejected the “we’re just a platform” defence when platforms exercise significant control over transactions.
TechCabal – “Kenyan Court Rules Sendy Must Pay VAT, Shaking Gig Economy Platforms” (October 28, 2025)
https://techcabal.com/2025/10/28/kenyan-court-sendy-must-pay-vat/ TechCabal
Business Daily Africa – “Court Decision on VAT to Rattle Kenya’s Gig Economy” (October 27, 2025)
https://www.businessdailyafrica.com/bd/economy/court-decision-on-vat-to-rattle-kenya-s-gig-economy-5247066 Business Daily
Techweez – “Apps Like Uber and Glovo to Pay 16% VAT on Every Ride” (October 28, 2025)
https://techweez.com/2025/10/28/kenya-digital-platforms-vat-ruling/ techweez.com
Startup Researcher – “Kenya Court Ruling Puts VAT Burden on Gig Platforms” (October 28, 2025)
https://www.startupresearcher.com/news/kenya-court-ruling-puts-vat-burden-on-gig-platforms Startup Researcher
LinkedIn Post – TechCabal summary of Sendy ruling (October 2025)
https://www.linkedin.com/posts/techcabal_sendy-thekenyan-logistics-startup-that-activity-7388962767745220609-1PdB LinkedIn
X (formerly Twitter) Post – legal observer note of Sendy ruling
https://x.com/MaxJumaEsq/status/1983102892849427627 x.com
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