Sendy Busted in Sh82 Million Tax Fraud as Court Exposes Digital Platform Scam

In a bombshell ruling that has rocked Kenya’s digital economy, the High Court has exposed logistics giant Sendy Limited in a massive Sh82 million tax evasion scheme, finding that the company deliberately misrepresented its business model to dodge Value Added Tax obligations.

Justice Helene Namisi delivered the damning judgment on October 23, tearing apart Sendy’s elaborate cover story that it was merely a “technology platform” connecting customers with independent transporters. The judge found that this was nothing more than a smokescreen to avoid paying taxes on the full value of delivery services.

“The Respondent does not merely introduce a customer to a driver. It sets the rules of engagement, controls the allocation of the job, determines the price, and most critically, takes responsibility for the entire billing and payment process,” Justice Namisi declared, effectively calling out Sendy’s business model as a tax avoidance scheme.

The fraud came to light when KRA auditors discovered shocking variances between what Sendy declared in tax returns and what was actually flowing through the company’s bank accounts.

After analyzing banking records in November 2021, investigators found that Sendy had been collecting full payment for delivery services from customers but only declaring VAT on the small commission it paid itself, leaving the taxman empty-handed on the bulk of the transactions.

The court heard how Sendy brazenly issued “Requests for Payment” to customers, collected money directly into its own accounts, and controlled every aspect of the delivery service from pricing to driver dispatch. Yet the company had the audacity to claim it was just a harmless tech platform deserving special tax treatment.

Even more scandalous, Sendy had previously obtained a private ruling from KRA in June 2020 that seemed to bless its questionable tax arrangement. But when investigators dug deeper during the 2021 audit, they realized the company had pulled a fast one. KRA moved swiftly to correct its mistake, issuing fresh assessments in December 2022.

Sendy fought back viciously, dragging the case through the Tax Appeals Tribunal, which initially bought the company’s story hook, line and sinker. The Tribunal ruled in Sendy’s favor in April 2024, swallowing the argument that because Sendy didn’t own delivery vehicles, it couldn’t possibly be in the transport business.

But Justice Namisi wasn’t having any of it. Drawing on international cases involving Uber and OnlyFans, she exposed the fatal flaw in Sendy’s defense. “A platform’s power lies not in physical capital but in its control over the network, the data and the transaction itself,” the judge ruled, dismissing the Tribunal’s decision as dangerously naive about how the digital economy actually works.

The court found that from the customer’s perspective, they were doing business with Sendy, not some random driver. Sendy’s app dispatched the driver, Sendy’s system set the price, Sendy’s platform demanded payment, and Sendy’s bank account received the money. The so-called “independent transporters” were mere puppets in Sendy’s elaborate tax dodge.

“This level of integration and control places the Respondent squarely in a position of principal supplier for VAT purposes,” Justice Namisi declared, ordering Sendy to cough up the full Sh82,248,150.74 in unpaid taxes.

The ruling sends a chilling message to other digital platforms operating similar schemes. Bolt, Uber, Glovo, Little Cab and a host of other gig economy players could now find themselves in KRA’s crosshairs as the taxman applies the same logic to their operations.

Industry insiders say the judgment could force a complete overhaul of how platform businesses operate in Kenya. Companies that have been skating by on the “we’re just tech companies” excuse will now have to face reality: if you control the transaction, you pay tax on the full amount.

For Sendy, the defeat is particularly bitter. Not only must it pay the Sh82 million assessment, but the company’s carefully crafted business model has been exposed as nothing more than an elaborate tax evasion scheme. The court even refused to award costs to either party, a subtle dig suggesting both sides had engaged in questionable conduct.

While Justice Namisi acknowledged that KRA’s decision to renege on its own 2020 ruling was “questionable conduct,” she made clear that administrative incompetence cannot override the law. “An administrative opinion, while creating a legitimate expectation for the taxpayer against the administrator, cannot override a judicial determination of the law,” she ruled.

The judgment arrives at a time when KRA is under intense pressure to meet ambitious revenue targets. With the government’s appetite for taxes growing by the day, digital platforms that thought they could hide behind fancy technology jargon are learning a harsh lesson: in Kenya, everyone pays their fair share, or faces the consequences.

For the thousands of Kenyans who depend on gig economy platforms for their livelihoods, the ruling raises uncomfortable questions. Will companies pass the additional tax burden on to customers through higher prices? Will drivers and riders see their already meager earnings squeezed further? Or will some platforms simply pack up and leave the Kenyan market altogether?

What is certain is that the cozy days of digital platforms playing fast and loose with tax obligations are over. The taxman has their number, and he’s coming to collect.