Kenya Revenue Authority ramps up efforts to tax digital firms

Thursday, August 1st, 2019 00:00 |
Kenya Revenue Authority. Photo/Courtesy

Kenya Revenue Authority (KRA) is shopping for an application that will enable it to bring digital firms into the tax bracket.

The agency says targeting the multi-billion-shilling e-commerce economy which has been difficult to penetrate due to its complexity, is a part of a major plan to expand the tax base and collect more revenue.

KRA Commissioner in charge of strategy, innovation and risk management Mohamed Omar said yesterday the agency will acquire a digital service application to tap taxes at the source.

“With e-commerce, some Sh1.485 trillion is currently going through the platform,” he added. Alice Mureithi of PwC said when the owner of business is in US or Canada but is earning locally, Kenya’s law has a huge gap and it is important to re-look the tax situation.

Other participants raised concerns of double taxation, but the commissioner maintained that if value is generated in Kenya but earnings made elsewhere, then something must be done to make them pay taxes for all other local value additions in place.

Omar said the growth in transactions (e-commerce) were about Sh2 trillion in 2017 and increased to Sh6 trillion in 2018. 

“There is also Value Added Tax and all other taxes. We have international players who may not be (physically) in Kenya. But once we have the technology-based tax application things will change,” he added.

The app is expected to bring into the tax bracket local players and international players like Airbnb, digital lenders, betting firms and content writers.

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