Key takeaways
- 21 African countries have implemented VAT or GST rules on electronically supplied services (ESS), with several more preparing to follow.
- A growing number of nations are adopting Digital Services Taxes (DSTs) to capture revenue from cross-border digital activities.
- Businesses operating in Africa must stay informed on evolving digital tax regulations, as requirements and registration processes differ across countries.
In short: African countries are changing their tax systems to collect revenue from the digital economy. Out of Africa's 54 countries, 21 now require non-resident suppliers to charge VAT or GST on electronically supplied services. Five more are expected to join soon. Some countries also use a Digital Services Tax.
Update (October 2026): Kenya is replacing its Digital Service Tax with a Significant Economic Presence Tax. Draft regulations published by the Kenya Revenue Authority in 2025 revoke the 2020 DST regulations. They deem taxable profit at 10% of gross turnover, taxed at 30%, which is an effective 3% of turnover.
A recent report shows that African nations are reforming their tax systems to tax the growing digital economy. Out of Africa's 54 countries, 21 have rules that require non-resident suppliers to account for Value Added Tax (VAT) or Goods and Services Tax (GST). These rules cover electronically supplied services (ESS). Five more countries are expected to join soon.
Several countries have also introduced a Digital Services Tax (DST). A DST targets revenue from specific digital activities and transactions. This shift is part of a wider push to tax digital services that cross traditional borders.
The report shows how varied digital tax rules are across Africa. Tax policies, compliance rules and registration steps differ a lot from country to country. That is why businesses need to adapt and stay informed as these rules change.
Kenya is a good example. Kenya first introduced VAT rules for digital marketplace supplies in 2020, and these rules have since changed a lot. Now, all non-resident suppliers of taxable digital services must register for VAT in Kenya. They must apply the standard rate of 16% to their sales. The aim is to make compliance simpler and to collect revenue fairly from digital services sold to Kenyan consumers.
Africa's economy keeps moving online. So adapting tax laws to this digital shift remains a priority for tax authorities and for businesses that operate across the continent.
What is the difference between VAT on digital services and a DST?
VAT on electronic services is a tax on consumption. The supplier charges it to the customer and pays it to the tax authority. A DST, or a tax like Kenya’s Significant Economic Presence Tax, is a tax on the supplier’s own income. It is a cost to the business, not something added to the customer’s price.
Many suppliers face both. In Kenya, a non-resident streaming or software business can owe VAT on its sales and income tax on its deemed profit.
How do foreign digital service providers comply with VAT in Kenya?
Non-resident suppliers of digital services to Kenya must register for VAT from their first sale, because there is no registration threshold. They charge 16% VAT and file monthly.
- Register: use the simplified registration framework on the iTax portal. A supplier that does not register this way must appoint a tax representative.
- Charge VAT on all sales: the non-resident supplier accounts for VAT on both business and consumer sales.
- File and pay: VAT is due by the 20th day of the following month, in Kenyan shillings.
- Check what counts: examples include social media advertising aimed at Kenya, email hosting, cloud back-up and reading subscriptions.
The Kenya Revenue Authority sets out these rules in its FAQs. In September 2023, it gave non-compliant providers 30 days to register and warned of enforcement action.
What does this mean for businesses selling digital services into Africa?
Each country sets its own rules, so check every market you sell into. In practice, this means:
- Register where required: Non-resident suppliers of digital services may need a local VAT registration, even without an office in the country.
- Watch the thresholds: South Africa requires foreign suppliers of electronic services to register once their supplies exceed R1 million in a 12-month period. The standard rate is 15%, according to SARS guidance.
- Identify local customers: Keep evidence of where each customer is located, such as billing address, IP address or payment details.
- Track income taxes too: Where a DST or similar tax applies, it is filed separately from VAT.
How Taxually handles this
Taxually’s CrossTax handles VAT registration, VAT, OSS and IOSS returns and fiscal representation in the countries you sell into, and checks your sales data against 250+ validation rules before each filing. OneTax then pays every tax authority with one bulk payment in your chosen currency.
Related guides
Frequently asked questions
What are the new digital tax rules in Africa?
Many African countries are introducing digital tax rules to capture revenue from the growing online economy. So far, 21 countries require non-resident suppliers of electronic services to register and pay VAT or GST, with several more expected to follow soon.
How does Kenya’s digital VAT system work?
In Kenya, non-resident suppliers of digital services must register for VAT and apply a 16% VAT rate on transactions made to Kenyan consumers. These updates, introduced in 2020 and recently amended, aim to simplify compliance and ensure fair taxation for digital services provided in the country.
Do foreign suppliers of electronic services need to register for VAT in South Africa?
Yes, once their electronic services supplied in South Africa exceed R1 million in a 12-month period. VAT is then charged at the standard rate of 15%.
What is the difference between VAT on digital services and a Digital Services Tax?
VAT is charged to the customer and passed on to the tax authority. A Digital Services Tax is a tax on the supplier’s own revenue, so it is a cost to the business.
What tax has replaced Kenya’s Digital Service Tax?
Kenya is replacing its Digital Service Tax with a Significant Economic Presence Tax. Under draft 2025 regulations, it works out at an effective 3% of gross turnover for non-resident digital service providers.
Is there a VAT registration threshold for foreign digital suppliers in Kenya?
No. Non-resident suppliers of digital services must register from their first sale to Kenya, using the simplified registration framework on iTax or a tax representative.
When is Kenyan VAT on digital services due?
VAT is due by the 20th day of the following month. The month is set by the earliest of the supply, the invoice or the payment. VAT must be paid in Kenyan shillings.
