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. They are hosted on their official website but here is a breakdown of what’s going on.
KRA VAT on Online Businesses
The KRA states that a person supplying taxable services through online businesses shall be required to register for VAT in Kenya. After this, VAT shall be charged on these taxable services. They include:
- Downloadable digital content like apps, e-books and movies
- Subscription-based media including news, podcasts, online gaming streaming of TV shows and movies
- Electronic data management including website hosting, online data warehousing and cloud storage
- Supply of music films and games
- Supply of search-engine and automated helpdesk services
- Tickets bought for live events, theatre and restaurants purchased through the internet
- Distance teaching via pre-recorded medium or e-learning including the supply of online courses and training
- Digital content for listening, viewing or playing on any audio, visual or digital media.
- Services that link the supplier to the recipient including transport and hailing platforms
- Any other digital market supply that the Commissioner determines taxable
In recent news, the Treasury says that digital taxes will take effect from Jan 2021 KRA and they are targeting KES 5B from digital tax. Simply put;
The Digital Tax being introduced by KRA is for services like Netflix.. If you make money from your app or website maybe hosting, selling music etc Ceasar is coming for you
— Droid (@droid254) August 6, 2020
In terms of records, a digital marketplace supplier should for every tax submit to the Commissioner, a record of all the supplies made in Kenya. The report should indicate the value of the supplies and VAT deducted.
Failure to follow this protocol, you will be liable to a restriction of access to the digital marketplace in Kenya until you meet these obligations.
It is important to note that this is a draft and the KRA wants wide consultation and public participation with it. Thus, they invite sector players, tax professionals and members of the public to submit their comments on the regulations.
How do you think this will affect you? Read all about the digital taxes here