The Kenya Revenue Authority (KRA) has said it will initially roll out the digital service tax on a voluntary basis but will incorporate other entities if firms do not comply with the new regulation.
All online businesses will be levied a 1.5% tax which takes effect from January 1, 2020.
According to a recent clarificaton by the KRA, cryptocurrency platforms and exchanges operating in Kenya will also be required to remit this tax.
According to the taxman, third party information from card issuers and regulator data from the Central Bank of Kenya and the Communications Authority of Kenya (CA) will be used to nab tax cheats that fail to comply with this directive.
Speaking about this new approach towards expanding its tax base by incorporating entities operating locally but registered elsewhere, the KRA commissioner, General Githii Mburu, said:
“Initially we want to begin with a voluntary program. We have designed a simplified system allowing entities outside our jurisdiction to disclose their income and file returns.
Should we have the impression that entities are not paying the rightful amount of taxes, we have designed mechanisms of obtaining independent information to verify.” ~ KRA Commissioner, Githii Mburu
KRA is already working with the Ministry of ICT, Kenya, on a business sensitization framework ahead of the roll out of the new digital service tax.
The Digital Service Tax (DST) is a tax payable on income derived or accrued in Kenya from services offered through a digital marketplace. This tax is due at the time of the transfer of the payment for the service to the service provider.
The new tax is expected to touch on all digital businesses including cryptocurrency exchanges, platforms, and related activities operating within the Kenyan jurisdictions, as recently clarified by KRA.
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