U.S. Accuse Ruto of Over-Taxation
The United States Trade Representative (USTR) has expressed concern over Kenya’s taxation policies, particularly those targeting foreign companies.
In an official statement, the USTR criticized the Kenyan government for imposing multiple taxes that, it claims, restrict trade opportunities for U.S. firms operating in the country.
A central point of contention is the Significant Economic Presence (SEP) Tax, introduced under the Tax Laws (Amendment) Act of 2024. Effective December 27, 2024, the SEP tax replaced Kenya’s previous digital services tax. It imposes a 3% levy on gross revenues earned by non-resident entities that provide services through a digital marketplace in Kenya.
However, exemptions apply to non-residents operating through a permanent establishment in Kenya or those generating less than KSh 5 million annually. The U.S. maintains that this tax disproportionately impacts multinational companies and discourages foreign investment.
In addition to taxation, the U.S. raised concerns over Kenya’s import standards for agricultural products. Specifically, Kenya enforces a maximum moisture content of 13.5% and an aflatoxin limit of 10 parts per billion (ppb) for domestically grown and imported maize. According to the USTR, Kenya has not provided adequate scientific justification for these limits, which significantly raise costs for U.S. exporters.
The statement further notes that U.S. corn exports are routinely denied import permits. In rare instances where imports are allowed due to food shortages, the maize must be dried and milled immediately upon arrival to meet safety standards. These additional processing requirements, the U.S. argues, render American maize uncompetitive.
Concerns were also raised regarding Kenya’s import regulations on meat, dairy, and poultry. The USTR highlighted what it described as “complex, nontransparent, and costly” procedures enforced by the Directorate of Veterinary Services (DVS). Importers reportedly received rejections based on reasons unrelated to sanitary standards, complicating access to the Kenyan market.
The report also criticized the lack of transparency in government procurement processes. U.S. companies have reportedly struggled to win public tenders in Kenya. Allegations include corruption and a lack of timely announcements for tenders. In some cases, foreign firms with limited track records have secured contracts through partnerships with politically connected Kenyan entities.
Additionally, U.S. businesses have voiced frustration over delays in customs clearance. Despite the implementation of a single-window system intended to streamline procedures, the process remains inefficient and fragmented, involving multiple uncoordinated offices.
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U.S. Accuse Ruto of Over-Taxation
