Condia Insider: One continent, a thousand tax puzzles

🍔 Quick Bite: Kenya’s High Court just gave fintechs a “get out of VAT free” card, ruling that payment startups are basically banks when it comes to tax breaks. It’s a sweet deal for Kenyan fintechs, but not everyone on the continent is playing nice. 

🧠 The Breakdown

Last week, a Kenyan tribunal handed fintechs a major win. In a case brought by payments startup Pesapal, Justice Rhoda Rutto ruled that licensed digital payment providers are functionally equivalent to banks and therefore entitled to the same VAT exemptions. The court overturned an earlier tribunal order and cleared Pesapal of a KSh76.8 million ($526,000) VAT bill. By treating the function of digital money movers, rather than their technology, as the basis for tax relief, Kenya has now exempted fintechs from VAT on core payment services.

The decision establishes a precedent: function matters more than technology when determining tax treatment. Licensed fintechs in Kenya now enjoy the same VAT exemptions as traditional banks on their core payment services.

Last updated: September 8, 2025