Nairobi’s Attempts to Attract Higher Levels of Tech-related Investment

The Kenyan government has confirmed that it will be maintaining its 1.5% digital service tax on multinational tech giants, despite pressure from the Organisation for Economic Cooperation and Development (OECD) to join its global minimum tax initiative. Kenya’s digital service tax came into effect in January 2021, with the government opting for a low-tax regime in a push to encourage more tech giants such as Google, Amazon, and Microsoft to invest in the East African country. Since then, Kenya has made strides towards becoming Africa’s leading technology hub, with Google announcing in 2022 that it would be opening its first African innovation hub in Nairobi. However, the OECD has sought to prevent tech firms taking advantage of the loopholes created by low-tax jurisdictions. Major economies have alleged that tech firms can channel their profits through countries such as Kenya to avoid paying tax in higher-tax countries. The OECD believes that its minimum tax initiative will lead to an additional $125bn in multinational profits being taxed across OECD member countries.

AFRICAN BUSINESS