The Kenya Revenue Authority (KRA) has declared that the newly imposed Digital Service Taxes would have to be paid by all influencers doing business on digital platforms. The taxman noted in a public notice that there is a rising number of influencers who do not file tax returns or pay transaction taxes.
“Social media influencers will be liable to pay digital service tax since their income is derived from or accrued from the provision of services through a digital marketplace or by providing digital advertising services in Kenya,” the statement read in part.
Here Is What You Need To Know
- An influencer is a person who commands a follower through a media network through the goods or services they use or participate in to drive sales or popularity, says to the taxman.
- DST on sales from services offered through the digital marketplace in Kenya was implemented by the Finance Act 2020 and will be applied to the gross transaction value at 1.5 percent (exclusive of VAT).
“Kindly note the tax will be collected and remitted by agents appointed by the commissioner of Domestic Taxes,” KRA added.
- The authority said last week that it was targeting more than 1,000 companies and individuals under the new digital taxes.
- It added that, at the time of the transfer of payment for the service to the service provider, the tax is due.
Read also: Digital Tax Regime Starts In Kenya. Here Is What Your Startup Should Know
Keeping The Conversations Going
Already, the plan to tax social media influencers has generated controversies across different social media platforms. Below are some of the conversations:
Follow the discussions, including who will be appointed tax agents (whistle blowers) against media influencers, on Kenya Revenue Authority’s Twitter handle here.
The New Era Of Digital Service Tax In Kenya
- With effect from January 1, 2021, all digital marketplaces operating in Kenya will now be required to pay a 1.5% digital service tax after the Finance Act 2020 amendment of the Income Tax Act of Kenya was passed into law.
- The new 1.5% ‘Digital Service Tax’ (DST) imposed on the gross transaction value of services is due at the time of payment.
- Additionally, under Kenya’s new 2020 Value Added Tax (Digital Market Supply) Regulations, digital marketplaces (ecommerce websites) that fail to pay Value Added Tax (at 14%) pursuant Section 5(8) of the country’s Value Added Tax Act, 2013 shall, in addition to the penalties prescribed under the law, be liable to restriction of access to their websites in Kenya until such tax is paid.
- With these regulations, Kenyan Revenue Authority (KRA) is targeting ecommerce platforms with taxes to fund the Sh3 trillion ($28 billion) 2020/2021 budget.
“A digital marketplace supplier from an export country who is required to register under the simplified VAT registration framework shall apply to the Commissioner for registration within thirty days from the publication of these regulations,” the regulation reads in part.
- Under the regulation, any person offering taxable services through a digital marketplace (ecommerce) shall be required to register for tax in Kenya.
- The new tax now means that if, for instance, you are are taking an Uber and the cost of the trip is KES 100, the digital service tax is KES 1.5. If the fee is KES 200, the tax is KES 3.
- The Kenya Revenue Authority (KRA), in charge of implementing and enforcing taxes in Kenya, has said it has created a special unit to track transactions and tax multi-nationsl using data-driven detection.
- One will be subject to DST if one provides or facilitates provision of a service to a user who is located in Kenya.
Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based lawyer who has advised startups across Africa on issues such as startup funding (Venture Capital, Debt financing, private equity, angel investing etc), taxation, strategies, etc. He also has special focus on the protection of business or brands’ intellectual property rights ( such as trademark, patent or design) across Africa and other foreign jurisdictions.
He is well versed on issues of ESG (sustainability), media and entertainment law, corporate finance and governance.
He is also an award-winning writer
influencers tax Kenya