In a precedent-setting judgment, the High Court has ordered Sendy Limited to pay KES 82.2 million ($635,000) in value-added tax (VAT) to the Kenya Revenue Authority (KRA), ruling that the company is not merely a digital intermediary but a principal service provider in its logistics transactions.
Justice Helene R. Namisi found that Sendy “exercises a decisive degree of control over the essential elements of the delivery service,” including setting terms, dispatching drivers, and collecting payments in its own name. The Court held that, for VAT purposes, Sendy effectively receives the transport service from third-party drivers and supplies it to the end customer.
“The customer pays the Respondent, not the driver,” the judgment stated. “This level of integration and control places the Respondent squarely in a position of principal supplier.”
Court Rejects ‘Commission-Only’ VAT Argument
The ruling overturns a 2024 decision by the Tax Appeals Tribunal, which had accepted Sendy’s claim that it was a technology platform earning commission income. The Tribunal had found that VAT should only apply to the commission charged to drivers.
However, the High Court disagreed, stating the Tribunal “erred in law” by ignoring the commercial reality of Sendy’s operations. The Court emphasised that VAT liability must reflect economic substance, not contractual form.
Sendy Under Administration: KRA Eyes Asset Recovery
Sendy remains under administration, with its receiver manager yet to finalise the process. The KRA may consider seizing and auctioning unsold assets to recover the VAT liability. The administrator could not be reached for comment.
Platforms Under Scrutiny: Uber, Glovo, Jumia Could Be Next
The implications of the ruling extend far beyond Sendy. By treating the company as a principal supplier, the Court has effectively expanded KRA’s mandate to pursue other digital platforms that control pricing, dispatch, and payment flows.
This could affect ride-hailing apps like Uber, Bolt, and Little Cab, food delivery services such as Glovo, and e-commerce platforms like Jumia and Kilimall, all of which have long argued they are “technology companies,” not service providers.
Under the new interpretation, VAT would apply to the full amount paid by customers through these platforms, not just the commission or service fee. That shift could significantly increase tax exposure and operational costs for platform-based businesses.
As platforms scale, regulators are moving to ensure tax compliance keeps pace with innovation. The Sendy decision signals a turning point in how Kenya treats platform transactions for VAT purposes—and may reshape the digital business landscape.
