Kenya’s payment system might just have gotten its biggest legal shake-up yet. On October 24, the Tax Appeals Tribunal ruled that the Kenya Revenue Authority (KRA) can’t charge the usual 16% VAT on companies that connect banks, mobile money operators, and payment providers. In short, the people who make digital payments work behind the scenes just won a major victory, and it could change how Kenya taxes financial infrastructure going forward.
At the centre of it all is Kenswitch, a company that links ATMs and point-of-sale systems across banks. KRA had argued that Kenswitch’s services counted as ICT operations and should therefore be taxed. But the tribunal disagreed, ruling that Kenswitch’s work falls under financial services, and financial services are VAT-exempt. This ruling effectively saves the company millions and draws a new line between what’s “tech” and what’s “finance.”
For those who don’t know, firms like Kenswitch are the invisible traffic controllers of Kenya’s payment network. Every time you tap your card or use mobile money, they handle the handshake between your bank and the merchant’s bank. They’re not selling software; they’re making sure your money moves. And now, legally speaking, they’re part of the financial system, not just another ICT vendor.
Read more: https://techpoint.africa/insight/techpoint-digest-1217/
