[WATCH] Kenyan Digital Service Tax (DST) Takes Effect in January 2021 – To Affect Crypto Exchanges / Firms

0
541
JOIN US ON TELEGRAM

The Kenya Digital Service Tax (DST) takes effect beginning in January 2021 requiring all ‘digital marketplaces’ to remit a 1.5% tax on the gross transaction value of the digital services provided.

The DST applies to any service provided in a digital market place (defined as a platform enabling direct interaction between buyers & sellers via electronic means).

____________________________________________________________________

SEE ALSO: [WATCH] The Digital Service Tax Will Be Applicable on Cryptocurrencies, Says Kenya Revenue Authority

____________________________________________________________________

For Kenyan businesses, the DST will be an advance tax. This means that the DST deducted & paid to KRA on the digital services can be used by the business to offset it’s tax liability for that year. Basically, the tax it has to pay to KRA minus the total DST that had been deducted & remitted.

Considering that the tax is charged on the gross revenues – without deducting the business expenses – this is expected to have an impact on their cash flows.

___________________________

  • So, Who Pays the DST?

The obligation is on the service provider to deduct the 1.5% once they are paid by a user. Users have no obligation when it comes to DST.

Due to the nature of the business, and the fact that most of the cryptocurrency marketplaces operating in Kenya have no physical local presence, they would be required to appoint local tax representatives who would account and remit the tax on their behalf.

It is also expected that these marketplaces would pay such taxes on the behalf of their peer traders rather than hope the traders would self – declare the taxes on their trades.

___________________________

  • How Does this Affect You as a User/Consumer?

Well the service provider may increase the price of the service to cover the new DST expense, so you’ll have to fork out more. Or they could absorb the expense and maintain the existing prices. (Rem there’s also digital VAT now).

___________________________

  • How Does KRA Plan to Enforce DST Collection?

KRA has plans to appoint digital service tax agents to collect & remit the DST. This will likely be financial/payment service providers – banks, M-PESA. E.g. when using your NCBA card to pay Netflix, NCBA (if appointed) will be required to deduct the 1.5% & process net.

So far, no crypto platform operating in Kenya has expressed its intention to comply with the directive or talked about this new arrangement.

NB: We shall update as we get communication regarding the DST from the exchanges moving forward

____________________________________________________________________

RECOMMENDED READING: Binance Smart Chain Africa 2021 Tour Kicks Off Across 5 African Countries

____________________________________________________________________

Subscribe to the channel below to catch latest news on video:

____________________________________________________________________

Start trading bitcoin today from as low as $10.

Open a Paxful Bitcoin Trading Account to get started!

____________________________________________________________________

LEAVE A REPLY

Please enter your comment!
Please enter your name here