KRA to start levying 1.5pc tax on digital businesses in January

Thursday, July 2nd, 2020 00:00 |
Digital tax.

 Lewis Njoka @LewisNjoka

Kenya Revenue Authority (KRA)  will start demanding a 1.5 per cent digital tax on the value of digital transactions effective January 1, as per the Finance Bill 2020, banking on the evolving industry to shore up revenue.

The move which targets local firms and multinationals like Uber, Facebook and Netflix operating locally also affects individuals including artists and even websites owned by individuals as Treasury seeks new pockets of revenue.

This certainty follows President Uhuru Kenyatta’s assent to the 2020 Finance Bill on Tuesday evening, in a move that may not augur well with innovative youths and firms who have turned to online for business.

It targets websites, webhosting services, remote maintenance of programs and equipment, software and updating of software, access to databases, self-education packages, music, films or games and political, cultural, artistic, sporting, scientific and other broadcasts and events including broadcast television.

Presiden Kenyatta also signed into law the 2020/21 Budget and the 2019/20 third supplementary budget gave the green lights for Kenya’s Sh3.2 trillion 2020/21 budget which contains a Sh56.6 billion post Covid-19 economic stimulus package and an allocation of Sh128.3 billion to the Government’s Big Four agenda.

“The 2020 Finance Bill which is now law has several amendments targeted at cushioning Kenyans from the adverse effects of the Covid-19 pandemic.

Some of the amendments in the Finance Act include the zero rating of VAT on maize, cassava and wheat flour for 6 months so as to make unga affordable,” said PSCU in a statement to media.

The other tax proposal set to take effect January 2021 include the the extension of the upper limit of income tax paid by landlords from Sh10 million to Sh15 million which will gross more high net landlords.

Michael Mburugu, a partner at PKF Kenya warned that landlords should not take advantage of the new laws to hike rent.

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