Bolt drivers will now have to pay 16% VAT on digital supplies after the company stopped covering the tax – a move that may escalate tensions with drivers.

Bolt Stops VAT Absorption After 15 Months

For the last 15 months, Bolt had been absorbing the VAT obligation on behalf of its drivers after the 2023 ratification of the Digital Marketplace Tax Regulations. But citing regulatory clarity from the Kenya Revenue Authority (KRA) and the National Transport and Safety Authority (NTSA), Bolt has announced that drivers will now bear the tax cost.

“With regulatory clarity now in place, and following guidance from the KRA and NTSA, we have decided to introduce the VAT obligation,” said Bolt in a statement.

The company said this is in line with its commitment to regulatory compliance and responsible business operations in Kenya’s digital economy.

Fallout with Drivers

This may spark renewed friction between Bolt and its drivers who have previously protested low fares on the platform. In August 2024, Bolt responded to these concerns by increasing base fares across all trip categories by 10%. But this gain will be eroded by the new VAT requirement which will see drivers paying an additional 16% commission to the platform.

Kenya’s Digital Tax Regulations Explained

Kenya’s taxation of digital services has changed a lot in recent years.

  • October 2020 – The Treasury introduced VAT on digital marketplace supplies requiring non-resident companies offering electronic services to Kenyan individuals (B2C) to pay VAT at 16%.

  • April 2021 – The VAT regulations came into effect.

  • Finance Act 2022 – The Act removed the distinction between B2B and B2C transactions meaning businesses could no longer rely on the reverse charge mechanism for VAT compliance.

  • 2023 VAT Regulations Update – The regulations were revoked and replaced with the VAT (Electronic, Internet and Digital Marketplace Supply) regulations further refining tax obligations for non-resident digital service providers.

What’s Next for Bolt and Its Drivers?

With Bolt passing the tax to drivers, the ride-hailing industry in Kenya may see more disputes over fares and earnings. The VAT comes at a time when there are ongoing talks between ride-hailing platforms, regulators and drivers on pricing and operational costs.

As digital taxation continues to change, Bolt and Uber may review their business models in Kenya and that will affect both drivers and passengers.