KRA Given Go Ahead To Tax Netflix, Uber by 1.5%, Effective January 2021

President Uhuru Kenyatta signing a bill that gives KRA green light to tax Netflix and Uber.

Kenyans’ worst nightmare has taken another twist following the operation of the 1.5 percent digital services tax levied on gross sales by online businesses such as Netflix and Uber, which is set to take effect early next year.

This is after President Uhuru Kenyatta assented to the 2020 Finance Bill on Tuesday June 30.

The proposition will see digital tax applied to subscription-based media, including journals, magazines news, streaming services (e.g. Netflix); podcasts; online gaming; music; downloadable digital content, including mobile apps, e-books, and films; and even software programs. This is basically everything making cash on the internet.

Also, the taxman will now require businesses that offer digital services like web hosting, and cloud storage services, to charge and remit taxes.

The informal sector is also included from e-learning services, sale of events tickets, search-engine and automated helpdesk services and other various supply channels of digital content.

Other passed tax proposals expected to take effect on January 1, 2021 include the the extension of the upper limit of the residential income tax paid by landlords from Ksh.10 million to Ksh.15 million.

Notable taxes taking effect immediately include the lowering of the threshold on excise duty charged to beer and spirits by alcohol strength from over 10 percent to six percent, a factor set to raise the prices of some beers and spirits.

The controversial one percent minimum tax on the gross turnovers of loss making firms is also included as part of the bill.

Both the President and the National Assembly agreed with Treasury’s plan to moot loopholes in tax mobilisation.

In total, the bill has sort to raise Ksh.38.9 billion in new tax revenues to further anchor funding for the Ksh.2.79 trillion net spending by government in the new financial year commencing July 1.

The Bill, now an Act of Parliament further contains the Ksh.56.6 billion economic stimulus package that contains key funding on eight thematic areas including tourism and SMEs as measures to guide the economy’s rebound.

The Kenya Revenue Authority (KRA) has also set up a special unit that will oversee tax collection from digital companies.

The unit will ensure digital marketplace players pay taxes as the taxman finds more ways to meet his tax expectations.

“To ensure that the digital market sector pays their fair share of taxes, KRA has set up a dedicated unit to facilitate the taxpayers in this sector in the determination and accounting for taxes,” said Caxton Masudi, the deputy commissioner in charge of policy and domestic taxes talking to the Business Daily last week.

KRA is targeting multinationals as well as other digital marketplaces in its quest to increase revenue.

Earlier this month, the National Treasury published the Value Added Tax (Digital Marketplace Supply) Regulations, 2020 draft.

According to the draft, digital firms have to pay the taxman 1.5% on the value of digital transactions as income tax.

The draft provided a wide scoop on digital content that will be taxed from subscription-based media, podcasts, online gaming; music, and downloadable digital content, including mobile apps, e-books, and films; and even software programs.

According to the publication, a company will be liable to remit taxes to KRA as long as their digital content is “paid for through a Kenyan bank, credit card or SIM card and delivered to an IP address in the country.”

Facebook Comments
Would you like to get published on this blog? Email us on 254habari@gmail.com if you have any breaking news, Exposes, story ideas, human interest articles or interesting videos

LEAVE A REPLY

Please enter your comment!
Please enter your name here