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State moves to tax online food delivery outlets

Tourism Fund has directed all food hailing apps to and merchants listed on their platforms to register and pay the 2% levy with immediate effect

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by ALFRED ONYANGO

Kenya29 January 2024 - 14:17
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In Summary


  • The state agency has directed the food hailing apps to share their merchants data with the agency for verification and compliance check by end of January.
  • They are also required to provide the agency with legal names, registration details and the address of the individual organisations, the directors/ CEO.
Edga Kipngetich, Bolt Food Country Manager with Daniel Karim Bolt Food courier go through the features of an electric bike during Bolt Ebike launch at their offices in Nairobi

Ordering your favourite milk online will now cost you more after the government spalled a two percent levy on all deliveries.

The Tourism Fund has directed all food hailing apps and merchants listed on their platforms to register and pay the two per cent levy with immediate effect.

This means for instance, a person ordering food worth Sh2,000 will remit Sh40 to the Fund.

The decision comes after previous engagements involving the Fund with Uber Eats, Bolt food, Little Africa and Glovo Kenya.

The fund also directed the food hailing apps to share their merchants data with the agency for verification and compliance check by end of January.

“Any new registration as an online food seller are required to have the agency’s compliance certificate,” the Fund said in the notice.

They are expected to provide the agency with legal names, registration details and the address of the individual organisations, the directors/ CEO or authorised representatives.

The Catering Levy was initially payable by restaurant/bar establishments making minimum gross sales of Sh3 million per annum or an average of Sh250,000 for the first three trading months.

It was mainly intended to manage and shape the levy systems that support and fund tourism services in the country.

It was recently imposed on Airbnbs, a move that was welcomed by stakeholders in the hospitality sector.

Kenya Association of Hotelkeepers and Caterers (KAHC) said the move was sustainable for the fund, as a lot of businesses have moved to alternative accommodation, and this requirement for registration would help regulate the sector..

With the new target, the food hailing apps, the state is widening its tax net to bring in previously untaxed areas and plug the revenue shortfall.

Kenya Revenue Authority (KRA) has moved to  rope in small-scale traders and informal sector workers into the tax bracket to increase ordinary revenues.,

Since the beginning of this Financial Year, KRA has rolled out a series of measures, hired thousands of new employees and entered into deals meant to on-board especially the informal sector into the tax bracket.

The decision comes at a time Kenyans are increasingly shopping online as projected by the latest insights from ride hailing app Uber.

In its insights presentation for the year 2023, it said e-commerce and delivery are rapidly growing, posting a 35 per cent year-on-year growth in groceries that the firm posted in the past year.

This was largely driven by the unmarried youth (bachelors), who were noted to be increasingly opting to shop online for all their household items compared to their married counterparts.

Uber further said that in recent times, shopping has undergone a significant transformation, with a growing number of people in Kenya and globally shifting their preferences to online shopping.

Uber Eats Kenya General Manager Kui Mbugua, said the growing interest in the firm’s grocery and retail business, shows people are starting to value the convenience and time saved.

“Initially when we launched we were definitely a top up shopping brand. But now we have families using us to top up shopping, while bachelors and bachelorettes using us to do their entire shopping on Uber eats,” Mbugua said.

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