KRA Plans To Tax Netflix, Uber, Jumia Among Other Online Businesses

The Kenya Revenue Authority (KRA) will now go after Online businesses if a new regulation; the Digital Marketplace supply(Value Added Tax Regulations 2020) is approved.

The new regulation published by the Treasury Cabinet Secretary will target taxes from digital platforms that apparently have not yet entered the tax bracket.

According to the new VAT regulations, all-digital enhanced platforms that allow direct interaction between a buyer and a seller will have to pay the taxes. The new regulation will affect both local and international entities.

The digital platforms that will be affected include Google, Jumia, Amazon, and Netflix will be affected by the new tax regulations.

The taxes will apply for downloading content through electronic media as well as downloading apps and movies from any platform.

Any form of online subscription including news, movies, TV shows, journals, music, and online gaming will be taxable. Software programs have not been spared from the taxing system.

Others that will be tax include taxi-hailing apps like Uber, Bolt, and Taxify, purchasing tickets through the internet for an event and supply of digital content.

However, before approval, public participation will be required. International Entities will have to apply for permits before being allowed to operate in Kenya as stated in the new VAT regulations.

“A digital marketplace supplier under these regulations who is from an export country shall be required to register under the simplified VAT registration framework, ” said Treasury CS Ukur Yattani.

“To ensure wide consultation and public participation, the Kenya Revenue Authority invites sector players, tax professionals and members of the public to submit their comments on the draft regulations, ”said KRA commissioner General James Mburu.

The new regulation seeks to include digital platforms in the tax bracket at a time when mobile money subscriptions and transactions have spiked.

Active mobile money subscribers had hit 28.9 million in the second quarter of the 2019/2020 financial year. This, in turn, increased the value of transactions with business to business transfers totaling up to 859.6 billion shillings, business to consumers transfers stood at 377.4 billion shillings while Consumers to businesses were valued at 294 billion shillings according to the Communications Authority of Kenya.

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