KRA To Collect Ksh 5 Billion From Digital Businesses

Kenya Revenue Authority (KRA) is set to collect at least 5 billion shillings from digital businesses through their online transactions in six months.

According to KRA, the taxes will be collected from all local and foreign businesses in the country that sell and supply a range of digital services and goods to Kenyans, from January to June, next year.

“We are looking at collecting 5 billion shillings between January and June from the digital economy. We have grown revenue in that area significantly,” Githii Mburu said.

The tax is to be imposed on all the taxable downloadable digital content including mobile apps, e-books and movies, music, and games, tickets for live events and theatres, subscription-based media including news, magazines, and digital content audio and video.

All the digital firms will be paying a flat tax of 1.5 percent on the value of goods supplied and sold online or services offered through digital platforms under the Income Tax (Digital Service Tax), 2020 that takes effect from January 1.

Foreign businesses will, under the regulations, issue registration details like websites, the national tax identification number issued to the supplier, certificate of incorporation, postal address, and name of the person handling the tax affairs of the supplier, among others.

KRA warned that any online business found to have dodged the tax will have to pay a penalty equivalent to double the amount dodged or a 100 000 shilling fine for failing to comply with the electronic tax system.

According to the National Treasury, the technology sector generated 427 billion shillings last year, meaning business was making a lot of profits that the Kenya Revenue Authority could also benefit from.

Taxes on online businesses were introduced through the Finance Act 2020 for the KRA to widen its tax base as it taps into the fast-growing and profitable technology sector.