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Economy

Google warns of risk in Kenya's digital tax push

income tax
Online business likely to be slapped with an income tax. FILE PHOTO | NMG 

American technology giant Google has warned that Kenya risks trade wars with other countries if it imposes tax on digital transactions.

The Government has proposed review to law through the Finance Bill 2019 that will see online business slapped with an income tax. The multinational told Members of Parliament the amendments are contrary to the international tax system that requires companies to pay the bulk of their corporate tax in the countries where their products and services are created as opposed to where they are consumed.

Google public policy and government relations leader in the region Michael Murungi said if the law is passed in its current state it could set Kenya on a collision path with other jurisdictions.

“The risk with this is as we see happening in France after its decision to impose a unilateral tax on international firms on digital platforms ,” he said.

France stuck to its plan to tax big multinational tech companies, defying US President Donald Trump’s suggestion that he might impose tariffs on French wine. “France is now in the midst of a trade dispute with the US Treasury because of that tax which was seen as targeting Google and other multinational firms based in the US,” he told the House Finance committee during public hearings on the Finance Bill.

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