Kenya’s Finance Act 2025: a cleaner digital rulebook, a shorter runway for losses

Wednesdays, 17th September 2025

by inAfrika Reporter

The Finance Act 2025 reads dense, but its direction is clear enough to plan against. Lawmakers scrapped the short-lived Digital Assets Tax and replaced it with a 10% excise duty on fees charged by virtual-asset service providers. That one stroke moves the tax point from notional asset values to the platform fee, simplifying compliance for exchanges and custodians while making the cost visible to users in spreads and pricing. Professional summaries and tax alerts agree on the change and its intent: broaden the base, streamline administration, and avoid a square-peg levy in a round-hole market.

Significant Economic Presence got the other big rewrite. The law makes it explicit that non-residents earning Kenyan-source income “over the internet or an electronic network” fall within scope—not just those trading on a defined “digital marketplace.” It also removes the old turnover threshold that had let smaller non-resident players slip past. For global platforms, that ends the ambiguity: register, collect, remit. Treasury has timelines to deliver supporting regulations; smart operators are already mapping user locations, invoicing, and payments to avoid permanent-establishment surprises when guidance lands. Tax-firm analyses and alerts published in July set out the contours and likely next steps.

The Act also turns the clock into a policy tool. Companies may no longer carry forward tax losses indefinitely; the window now closes after five years from the period in which the loss arises, with a pathway for extensions via the Cabinet Secretary on the Commissioner’s recommendation. Capital-intensive projects and startups will need cleaner paths to profitability or more deliberate group structures to ensure shields are used before time runs out. Boards will want colder eyes on deferred tax assets and sensitivity runs that assume a five-year wall rather than a perpetual runway. Contemporary practitioner notes are blunt on the implications.

Clarity arrives, too, in cross-border pricing. The Commissioner is empowered to enter Advance Pricing Agreements, with effect from 1 January 2026 and a life capped at five years. That’s a practical signal to multinationals and fast-growing regional groups: invest early in principled methods and avoid the disputes that freeze capital and sour investor relations. Combined with the digital-economy edits, the message is coherence—not a tax grab, but a rulebook that can actually be obeyed and enforced. KPMG’s analysis, among others, frames the shift as alignment with international norms rather than an isolationist pivot.

In a year when monetary policy is easing from a high plateau and funding is selective, certainty itself becomes a competitive advantage. Operators touching virtual assets will re-paper pricing and disclosures to reflect the excise; non-resident digital sellers will treat SEPT as live and get their compliance house in order before regulations test them; founders leaning on losses will redraw their runway, and where warranted, prepare extension cases grounded in real investment and public-interest benefits. None of this is theatrical. It is the quiet work that keeps capital patient, boards calm, and customers served. The statute is now the map. The firms that read it early will move first, and in a market that rewards clarity, first movers earn time—the most valuable currency of all.