The game has fundamentally changed for digital platform operators in Kenya. On October 23, 2025, the High Court delivered a pivotal judgment in Commissioner of Domestic Taxes vs. Sendy Limited.
The Court has upheld the Kenya Revenue Authority’s (KRA) demand, making Sendy liable for VAT on the full gross receipts collected from customers, a sum confirmed at Ksh. 82,248,150.74.
The initial dispute stemmed from a VAT assessment where the KRA targeted the full customer payments flowing into Sendy’s accounts. The Tax Appeals Tribunal (TAT) sided with Sendy, characterizing it as an “asset-light” technology provider. The Tribunal believed the VAT liability belonged to the individual drivers who actually owned the vehicles.
The High Court was quick to point out the TAT’s error: they were misplaced in focusing on the lack of asset ownership. In the digital economy, power resides not in physical capital but in control over the network and the transaction itself. This was a failure to apply the correct legal lens.
The Court utilized comparative jurisprudence, pulling the “substance over form” doctrine from global cases like Fenix International (OnlyFans) and, crucially, the Uber case. The central legal question, who is making the supply under Section 5(1) of the VAT Act, was answered by the degree of control Sendy exercised.
Here’s a breakdown of the Court’s critical findings that sealed Sendy’s fate as a principal supplier:
1. Financial and billing control
The Court found that Sendy’s contractual structure, claiming the driver “charges” the customer, was a formality contradicted by economic reality.
- Request for Payment (RFP): Sendy issues the RFP, effectively authorising the charge in its own name.
- Payment Flow: The customer’s payment obligation is directed to Sendy; funds flow directly to Sendy’s bank accounts, not the driver’s.
- Conclusion: This level of integration and control over the financial lifecycle makes the driver’s cut look like a cost of sale, not a remittance of funds belonging to the driver.
2. Operational control
Sendy manages the core logistics of the service delivery itself.
- Algorithmic Dispatch: Sendy’s system dispatches the nearest available driver. The customer does not choose; they accept the assignment dictated by the platform.
- Decisive Influence: This was deemed a form of “authorising the delivery” and controlling which transporter performs the service—a key element of control highlighted in the Uber case.
3. Customer perception
From the customer’s point of view, the platform is the supplier. The customer interacts exclusively with the application and the Sendy brand. The Court ruled that the platform is not a transparent intermediary but the face of the transaction.
The Court’s Disposition was stark: “The Respondent’s role is far more analogous to that of Uber than to that of Airbnb… The customer pays the Respondent, not the driver.”
One major point of contention was the KRA’s own Private Ruling from June 2020, which advised Sendy that drivers were responsible for the transport VAT. The Court conceded that the KRA’s action in ignoring its own binding ruling created a breach of legitimate expectation.
However, the Court was clear: “A private ruling cannot override the correct statutory interpretation of the law.” The judicial duty is to enforce the law as enacted, and an administrative opinion, no matter how binding on the administrator, cannot defeat a correct legal determination.
The High Court found the appeal meritorious, setting aside the Tribunal’s decision. The KRA’s original VAT assessment against Sendy for Ksh. 82.2 million stands upheld.
This judgment mandates that any digital platform that dictates the terms, controls job allocation, determines the price, and handles the full billing process must now reassess its tax model. The era of claiming agency status based purely on asset-light operations is over.
Find the full judgement HERE.