KRA eyes Ksh.5 billion from the digital economy by June next year


KRA eyes Ksh.5 billion from the digital economy by June next year
KRA Commissioner General James Githii Mburu during an interview on Citizen TV's Newsnight on August 27, 2019.

In Summary

  • This ahead of the roll out of the digital services tax on January 1 which is levied on online businesses at the rate of 1.5 per cent of the gross transaction value.
  • KRA Commissioner General Githii Mburu says the tax man will roll out the tax on a voluntary basis as it aims to expand the tax base to incorporate entities earning from the local jurisdiction but are registered elsewhere.
  • The Digital Services Tax (DST) is a tax payable on income derived or accrued in Kenya from services offered through a digital market place

The Kenya Revenue Authority (KRA) has set its sights on raising Ksh.5 billion from the digital economy in six months to June 2021.

This ahead of the roll out of the digital services tax on January 1 which is levied on online businesses at the rate of 1.5 per cent of the gross transaction value.

KRA Commissioner General Githii Mburu says the tax man will roll out the tax on a voluntary basis as it aims to expand the tax base to incorporate entities earning from the local jurisdiction but are registered elsewhere.

“Initially we want to begin with a voluntary program. We have designed a simplified system allowing entities outside our jurisdiction to disclose their income and file returns,” he said.

The tax man will nevertheless incorporate third party information such as card issuer and regulator data from the Communication Authority of Kenya (CA) and the Central Bank of Kenya (CBK) to nab tax cheats.

“Should we have the impression that entities are not paying the rightful amount of taxes, we have designed mechanisms of obtaining independent information to verify,” Githii Mburu added.

KRA has been working alongside the ICT Ministry on a businesses sensitization framework ahead of the roll out of the new tax.

“Already, KRA has been putting a lot of information out there. We have already seen many people come into the tax base. Previously, people opted to hideaway thinking they were better off,” stated ICT Cabinet Secretary Joe Mucheru.

The Digital Services Tax (DST) is a tax payable on income derived or accrued in Kenya from services offered through a digital market place

The DST was introduced through the Finance Act 2020.

The tax will be due at the time of the transfer of the payment for the service to the service provider.

The new tax is expected to touch on all digital business including services such as Uber and Netflix.

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Story By Kepha Muiruri
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