Ruto’s Government Proposes Major Tax Reliefs in Digital Sector to Ease Cost of Living in Finance Bill 2025

Wednesday, April 30, 2025 – In an effort to ease the cost of living and stimulate growth in the digital economy, the Government has introduced significant tax relief proposals in the Finance Bill 2025.

Among the key measures is the proposed elimination of the 1.5% Digital Service Tax (DST), which currently applies to income earned by non-resident companies offering digital services in Kenya—such as Netflix, Facebook Marketplace, and similar platforms.

The DST, levied on the gross value of transactions (excluding VAT), targets digital businesses that operate without a physical presence in the country.

With a growing number of Kenyans using digital platforms for shopping, entertainment, and business, the removal of the DST is expected to reduce the cost of online services and purchases.

The Government is also proposing a cut in the tax on cryptocurrency transactions, halving it from 3% to 1.5%. This move is intended to foster innovation and attract investment in the fintech sector.

According to an official Cabinet statement, the digital economy tax reliefs align with the Government's broader strategy to close loopholes in existing tax laws rather than introducing new taxes, thereby easing the financial burden on citizens.

Analysts note that the proposed cuts may also be a calculated move to win favor with Gen Z—digital natives who form the bulk of online consumers and who played a major role in last year’s Finance Bill protests that significantly challenged President Ruto’s administration.