Governance

Online Sellers Urged To Start Paying Tax Before KRA Comes Knocking

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Online Business KRA

If you are running an online business on social media, you could soon have to shut down operations following the Kenya Revenue Authority (KRA) and the Kenya Copyright Board (KECOBO) pronouncements.

Online Businesses VS KRA

On April 25th, 2020, the KRA warned that many of those with online businesses are failing to remit Value Added Tax (VAT). In light of this, Kenyans.co.ke spoke to Nicholas Gachara who explained what the KRA notice means for youth operating online shops.

wt lighthouse

According to the KRA, taxation of profits and gains from online transactions is taxable according to the Income Tax Act cap 470 stating that appropriate taxes should be paid.

As of now, it may be difficult for KRA to immediately target online businesses as they are too many. However, structures allow them to go after online shop owners for tax evasion through various means.

They can target online businesses at any time. It can happen in the future, months or even years from now.

They will

  1. Get a bank statement from your bank or secure a court order. This will allow them access to your mobile money transactions over time.
  2. Ask to account for certain figures. If you can’t, you will be subjected to paying interest and punitive penalties. The law provides for KRA to act on lack of remittance.

As A Business Owner, What Should You Do?

What I would tell people is not to let it get to a point where you’re facing legal battles. Just find out what you need to comply and do so because the penalties are very punitive

As a small business owner, you should reach out to tax consultants. You can even directly contact KRA to understand how to go about paying VAT for your online business.

This announcement comes after KECOBO noted yesterday that deejays conducting live streams on social media were considered radio stations. This means that DJs would have to part with fees to acquire relevant licences. This is either from the copyright owners or Collective Management Organizations (CMOs).

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