KRA Given Greenlight To Tax Digital Businesses

KRA M-Service app
Image courtesy NewsZetu

Months after the dreaded bill from the National Treasury was made public, it is now clear that the Kenya Revenue Authority (KRA) will start taxing digital businesses as well as transactions made on online platforms.

This was made official after National Treasury  Cabinet Secretary Ukur Yatani gazetted the Digital Marketplace Supply Regulations, 2020. This now gives KRA the go-ahead to launch systems that will enable it to net revenues from the digital marketplace.

CS Ukur Yatani has now set January 1, 2021 as the effective date for the regulations, about three and half months away.

“These regulations may be cited as the Value Added Tax (Digital Marketplace Supply) Regulations, 2020,” Yatani states in the gazette notice dated September 25.

The digital marketplace in Kenya is one that has been growing at an immense rate over the past few years. This is mostly associated with the low capital needed to start such businesses and the lack of taxation as well. With this new law though, domestic and international online enterprises will have to start operating under the light of the government.

Taxable supplies made through a digital platform shall include electronic services and downloadable digital content such as mobile apps, e-books and movies. This will also include subscription-based media like news, magazines, journals, music, podcasts and online gaming.

This means popular digital content and service providers such as Google, Apple, Amazon, Jumia, Netflix and Showmax will be affected.

As expected, this could see a rise in the charges that we are normally used to which could be a bummer for may Kenyan consumers.

Digital transactions made to acquire tickets for live events and cinemas will also be taxed. Taxi-hailing apps like Uber and Bolt among more will also be in the taxman’s bracket once the regulations take effect.

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