Kenya’s High Court has delivered a judgment that could significantly reshape taxation in the country’s digital economy. In a ruling issued on October 23, 2025, the court ordered Sendy, a Kenyan logistics startup that collapsed in 2023, to pay KES 82.2 million (approximately USD 635,000) in value-added tax to the Kenya Revenue Authority. The court concluded that Sendy was not merely a digital marketplace connecting customers and delivery drivers but a service provider subject to VAT on the full value of its transactions.
How the Case Unfolded
Sendy had previously won a favorable ruling from the Tax Appeals Tribunal, which agreed that the company operated only as a technology platform and owed VAT solely on its commission fees. The Kenya Revenue Authority appealed, arguing that the tribunal had overlooked the commercial reality of Sendy’s operations. The High Court agreed with the KRA, stating that the tribunal “erred in law” and reinstating the tax authority’s right to collect the full VAT amount.
Court’s Interpretation of Sendy’s Business Model
Justice Helene R. Namisi determined that Sendy exercised “a decisive degree of control over the essential elements of the delivery service.” The court noted that Sendy set the terms of service, authorized deliveries, and received payments in its own name before disbursing funds to drivers. As such, Sendy was deemed the principal supplier of transport services for VAT purposes, making it liable for tax on the entire customer payment rather than just its facilitation fee.
Broader Tax Implications
This decision goes far beyond Sendy’s case, setting a precedent for how Kenya’s gig and platform economy may be taxed going forward. The ruling opens the door for the KRA to target other digital platforms that process payments and manage service delivery, such as Uber, Bolt, Little Cab, Glovo, Jumia, and Kilimall. If applied broadly, these companies could face new tax liabilities, as VAT would be calculated on total customer payments rather than the smaller commission portion they typically report.
Economic and Regulatory Context
Kenya’s digital economy has expanded rapidly, with e-commerce revenues projected to reach KES 145.8 billion (USD 900 million) in 2025, supported by over 12 million active users. The government has been tightening digital tax compliance to capture more revenue from the sector’s growth. This case signals that regulators and courts are aligning in treating digital platforms not as passive intermediaries but as active service providers within the tax system.
Financial Consequences for Sendy
Sendy, which entered administration in 2023 after years of rapid expansion, is still undergoing receivership. The Kenya Revenue Authority could move to seize or auction remaining company assets to recover the tax amount if proceeds from other sales fail to satisfy creditors. The administrator overseeing the process has not issued a public statement regarding the implications of the ruling.
The Sendy VAT ruling marks a pivotal moment for Kenya’s digital and gig economy. It confirms that platforms exercising control over pricing, delivery, and payment flows are liable for full VAT obligations, not just service commissions. Beyond Sendy’s case, the decision sends a clear message to Kenya’s growing ecosystem of digital platforms that the boundaries between “technology provider” and “service operator” are narrowing, with substantial fiscal consequences ahead.