The Kenya Revenue Authority (KRA) is targetting to collect at least Ksh5 Billion from the Digital Service Tax (DST) between January and June 2021.
Digital Service Tax (DST) is payable on income derived or accrued in Kenya from services offered through a digital marketplace.
The taxman in a statement released on January 5, 2021, stated that individuals and companies offering digital services will now pay 1.5 of their gross transaction value as DST effective January 1.
KRA further stated that the tax shall be due on or before the 20th day of the month the digital service was offered.
The digital tax will be applicable to all digital platforms enabling direct interaction between buyers and sellers of goods through electronic means in the country.
In addition to the DST, service providers will also be required to pay Value Added Tax (VAT) on digital supplies. The gross transaction value is exclusive of VAT.
Both resident and non-resident digital service providers and digital marketplace providers will be liable for the tax. For non-residents without permanent establishments in Kenya, their appointed tax representatives will also be subjected to the tax.
DST will be applicable for both business to business (B2B) and business to consumer (B2C) transactions.
"Application for registration by non-resident digital service providers without permanent establishment shall be done through an online registration form via the iTax portal.
"Resident digital service providers will be required to file a payment return on iTax on or before the 20th of February 2021," the statement reads in part.
A digital service provider shall be subject to DST if they provide or facilitate the provision of a service to a user who is located in Kenya.
KRA indicated that credit or debit card payments will aid in establishing if one is based in Kenya. Mobile phone country code, mobile phone location, and business, residential and billing addresses will also be employed in determining residence.
Some of the taxable services include; downloadable digital content including downloadable mobile applications, e-books and films; over-the-top services including streaming television shows, films, music, podcasts and any form of digital content.
Sale of, licensing of, or any other form of monetising data collected about Kenyan users which has been generated from the users’ activities on a digital marketplace and provision of a digital marketplace will also be taxed.
Others include: subscription-based media including news, magazines and journals; electronic data management including website hosting, online data warehousing, file-sharing and cloud storage services and
electronic booking or electronic ticketing services including the online sale of tickets.
Provision of search engine and automated held desk services including supply of customised search engine services; online distance training through pre-recorded media or e-learning including online courses and training; and any other service provided through a digital marketplace.
"DST is applicable to digital services, thus for goods sold on digital or social media platforms the suppliers are required to declare the income earned under the self-assessment regime provided under the relevant Tax Laws," the statement by KRA reads.
KRA advised that the tax due be paid in Kenyan currency (Kenya shillings) and deposited into KRA accounts of authorized Kenyan banks.
