The new digital tax will require online businesses to charge and account for Value Added Tax for sales on their e-commerce platforms. It is charged on income derived from or accrued in Kenya from service offered through a digital market place.
Further, the tax will require online businesses who do not have a presence in Kenya to employ local tax representatives who will remit their tax obligations. The digital tax is a final tax on non-resident individuals and corporate bodies, and on the other hand, residents will offset the charge against their corporate tax.
Public Notice: Call for Public and Stakeholder Comments on the Proposed Income Tax (Digital Service Tax) Regulations, 2020. @CG_KRA
The new tax is expected to affect foreign crypto platforms operating in Kenya that offer an online platform for buying and selling cryptocurrencies since they fall under ‘digital marketplace entity that accepts, authenticates, and processes payment transactions for merchants operating in the digital marketplace.’
The scope of taxable services as it relates to crypto platforms, includes the provision of a digital marketplace, website, or other online applications that link buyers and sellers.
There is no doubt that crypto and bitcoin platforms operating in Kenya fall under the above description and are thus eligible for the digital service tax.