The taxman has set up a special unit to track digital sales in part of its measures to boost collections in a depressed economy.
The new unit, Kenya Revenue Authority (KRA) said, would also facilitate taxpayers in determining and accounting for taxes.
“To make certain that the digital marketing sector pays their fair percentage of taxes, KRA has set up a dedicated unit to facilitate the taxpayers in this sector in the determination and accounting for taxes,” deputy commissioner in charge of coverage and domestic taxes Caxton Masudi said.
“We intend to use transaction tracers through data-driven detection in taxing multinationals as we roll out taxes on digital businesses.”
The digital tax revenues generated through technology firms that use the Internet to market and sell products.
Treasury Cabinet Secretary Ukur Yatani has imposed a levy of 1.5 percent on the value of digital transactions. He has, however, acknowledged that some online transactions are difficult to efficiently tax however the new levy might provide the framework for this. Kenya is targeting firms operating within the country with no physical presence but that create value and profits inside its jurisdiction.
Besides profits generated by way of companies within the digital marketplaces, Mr. Yatani is also looking at taxing buyers who purchase goods and services online after he published draft Value Added Tax (Digital Marketplace Supply) Regulations 2020.
According to the draft, the taxable digital content includes downloadable products including mobile applications, e-books and movies as well as subscription-based media including journals, news, magazines, streaming of TV shows, and music, podcasts and online gaming.
The taxman stated some of the criteria that would make the offerings taxable include if they are paid for through a Kenyan bank, credit card or SIM card and delivered to an IP address with in the country.
