The Kenya Revenue Authority has launched a division to track revenues from digital platforms for the purpose of taxing them. The special unit will help determine and account for digital taxes, months after the regulator announced plans to impose a 1.5% tax on digital transactions as per the Draft Finance Bill.
According to a Business Daily report, the new unit will “ensure that the digital market sector pays their fair share of taxes.”
Criteria for Digital Tax
The 1.5% tax applies to companies who either use the internet for marketing or selling products. Further, it extends to internet companies who do not have a physical presence in the country but earn income from their activities in Kenya like Netflix.
Provisions of the Draft Finance Bill extend the tax beyond businesses. Criteria for digital taxes recognizes all services paid via a Kenyan bank, Sim card, or bank card. Therefore, it extends to downloadable material like books and movies, software, distance learning, tickets for live events, and other digital content.
However, there are challenges in tracking all transactions carried out on digital platforms, hence the need for a digital tax unit.
We intend to use transaction tracers through data-driven detection in taxing multinationals as we roll out taxes on digital businesses.
KRA Deputy Commissioner Caxton Masudi.
SEE ALSO: Kenya to Apply 1.5% Tax on Digital Transactions