In this world of disappointments, there’s finally some good news. The Treasury is pushing for amendments to excuse locals from accounting for the digital service tax (DST).
Digital Service Tax and Foreigners
Under the 2021 Finance Bill, the Treasury wants the Digital Service Tax to be only applicable to non-residents/ foreigners from January 1, 2022.
Should this be adopted by Parliament, it means a break for local businesses operating in the online space.
This is because they will no longer be obligated to account for the tax. This is good news seeing as it’s only inside just 12 months of the DST implementation which commenced on January 1.
According to the Business Daily, Tax analysts expect the waiver of the tax on locals to eliminate the occurrence of double taxation. All while making significant strides to easing the cost of doing business in Kenya.
PwC stated this in a note highlighting the 2021 Finance Bill:
“This is a relief for online platforms which accrue and derive income within the Kenyan legal entity. This allows such entities to only pay corporate income tax when they are profitable.”
Tax analysts at KPMG also add that this provision will offer relief to residents. Especially those who are already subject to tax on the income that they derive from the digital platforms.”
Further amendments to DST provisions will see the expansion of the tax’s scope including businesses carried over the internet or an electronic network.