Kenyan influencers are in for a rough ride after the Kenya Revenue Authority (KRA) said that they are liable for the 1.5 percent Digital Service Tax (DST) that came into effect in January 2021.
“Social media influencers will be liable to pay DST since their income is derived from or accrued from the provision of services through a digital marketplace or providing digital advertising services in Kenya,” said KRA through the official Twitter handle.
Initially, the majority of Kenyans in the online space thought the Digital Service Tax (DST) was only meant for online marketplaces known for the buying and selling of goods such as Jumia, PigiaMe, and others. It seems the net is wider than it seemed.
The Kenya Finance Bill 2020 introduced a new Digital Services Tax on income from services provided through the digital marketplace in Kenya at the rate of 1.5 percent on the gross transaction value.
The DST applies to the income of a resident or nonresident person derived or accrued in Kenya from the provision of services through a digital marketplace. One will be subject to DST if one provides or facilitates the provision of a service to a user who is located in Kenya.
A user of a digital service is deemed to be located in Kenya if any of the following parameters are present; he/she accesses the digital interface from a computer or other electronic devices located in Kenya; payment for the digital services is made using a credit or debit facility provided by any financial institution or company in Kenya; the digital services are acquired using an internet protocol address registered in Kenya or an international mobile phone country code assigned to Kenya; and/or the user has a business, residential or billing address in Kenya.
According to Deloitte, without adequate guidelines and thresholds, the measure will pose administrative challenges. Ideally, it should be targeted at non-resident persons without taxable presence whose income/ sales arising from Kenya exceed a specified threshold.