Taxman eyes Sh5bn from digital businesses in six months

The Kenya Revenue Authority (KRA) is eyeing to collect at least Sh5 billion through the new on online transactions in the six months to June next year.

Commissioner-General Githii Mburu said taxes would be collected from all local and foreign businesses that sale and supply a range of digital services and goods in the country.

The firms will pay a flat tax of 1.5 per cent 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.

The taxes were introduced through the Finance Act 2020 in efforts to tap into the fast-growing technology sector and widen KRA’s tax base.

“We are looking at collecting Sh5 billion between January and June from the digital economy. We have grown revenue in that area significantly,” he said yesterday.

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.

Businesses risk a cash penalty equivalent to double the amount dodged or a Sh100 000 fine for failing to comply with the electronic tax system.

Some of the taxable downloadable digital content includes 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.

The Treasury says that the tech sector generated Sh427 billion last year, making it a lucrative avenue for the KRA.