Kenya’s tax authority was counting on a windfall. After signing onto a global agreement that would let them collect a 15% minimum tax from tech giants like Google, Meta, and Amazon, the Kenya Revenue Authority (KRA) had visions of billions in new revenue. Then Donald Trump stepped in and blew the whole thing up.
This week, the US brokered a deal with over 145 countries that essentially exempts American companies from the global minimum tax everyone agreed to just a few years ago.
Treasury Secretary Scott Bessent framed it as protecting American “tax sovereignty,” but what it really means is that Kenya and dozens of other countries just lost their ability to squeeze more money out of US multinationals.
Kenya had already done its homework, passing the Domestic Minimum Top-Up Tax through the Tax Laws Amendment Act in 2024. The law was supposed to kick in on January 1, 2025, targeting any multinational pulling in at least €750 million in annual revenue.
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The country even set up the payment schedule where companies would need to pay by the end of the fourth month after their fiscal year closes. For most firms, that meant a deadline of April 30 this year.
KRA was so committed they invited public comment on draft regulations in November, with submissions closing in December. They were dotting every i and crossing every t to make sure the tax was bulletproof. Now all that preparation looks like wasted effort.
The agreement Kenya signed onto came from the OECD in 2021, part of something called Pillar Two of the Base Erosion and Profit Shifting framework.
The whole point was to stop companies from playing shell games with their profits, booking them in tax havens like the British Virgin Islands while actually making their money in places like Kenya. It was supposed to be a global solution to a global problem.
Trump doesn’t see it that way, though. His administration pulled out of the framework last year, arguing it infringed on US sovereignty. Then he went further, threatening “revenge taxes” on countries that tried to tax American companies in ways Washington didn’t like.
After months of tense negotiations, complicated by China demanding similar exemptions and several EU countries worrying about competitive disadvantages, the US got what it wanted.
Philip Muema from Andersen Kenya put it bluntly in an interview with Business Daily: “We are following OECD rules, while they are not. That has an impact on global minimum tax and on revenue from multinationals in this part of the world.”
He noted the bitter irony of a developed country acting this way, effectively protecting its own interests while developing countries had been encouraged to play by the global rules.
Muema’s assessment about catching Uncle Sam’s cold rings true. Kenya built its entire tax strategy around an international framework that the most powerful player just decided to ignore.
The KRA now faces a choice: accept the loss of potential revenue or find another way to tax American tech companies operating on Kenyan soil.
KRA could craft a domestic framework outside the OECD structure to capture that revenue anyway, like new withholding taxes specifically targeted at foreign tech companies. However, going that route is risky.
Kenya would be walking exactly the path that triggered Trump’s threats of revenge taxes in the first place. The US has already shown it’s willing to strong-arm countries into backing down on taxing American companies.
The government would have to weigh the potential revenue against the risk of economic retaliation from Washington.
The OECD framework was sold as a way to create tax fairness in a globalized economy. Rich countries and poor countries would finally be on the same page about how to tax multinationals.
Yet, when push came to shove, the US simply opted out and forced everyone else to grant American companies special treatment.
