This archive report was first published on 11 June 2020.
On June 11, 2020, Treasury CS Ukur Yatani presented the maiden budget statement at the National Assembly, outlining plans to introduce a 1.15% Digital Service Tax on online transactions.
The tax aims to capture income derived through digital platforms, which has proven challenging to effectively tax.
As part of the Finance Act, 2019, the Cabinet Secretary of the National Treasury was granted the role of setting taxing modalities for the digital market place.
Value Added Tax (VAT) regulations, published in June 2020, bring the digital market place under the tax net, targeting businesses that sell electronic event tickets, software programs, web hosting services, and downloadable digital content.
Transport hailing platforms, subscription-based media, and online services such as streaming and music will also be subject to VAT charges.
Failure to file VAT returns within the prescribed period will attract penalties, including restrictions to access the local digital market place.
The government has allocated Ksh 14.9 billion to fund initiatives in the Information Communication Technology sector, including digital literacy programs and the rehabilitation of the National Optic Fibre Backbone Phase 11 Expansion Cable.
