This archive report was first published on 20 June 2020.
As the world grapples with the economic impact of the coronavirus pandemic, the Kenya Revenue Authority (KRA) has issued a stern warning to traders evading taxes through digital platforms.
Published on June 20, 2020, a public notice by Domestic Taxes Commissioner Elizabeth Meyo directed business owners trading on digital platforms to charge Value Added Tax (VAT) on their transactions and remit the taxes to the KRA.
"Some of the digital market place owners and the persons trading through such platforms have been found not to honour their tax obligations. We would like to inform such persons that they are obliged, under VAT Act, 2013, to charge and remit VAT on all sales and commission charged," she said in the notice.
The commissioner noted that failure to comply results in penalties and interest on outstanding taxes which may be determined during compliance checks.
Online retail businesses have been on the rise since 2019, following amendments to the Finance Act that clarified income from digital transactions attracts VAT.
The growth of online trading has been driven by the convenience it offers, particularly in the wake of restrictions to curb the spread of the coronavirus.
Businesses, including supermarkets, have joined online trading platforms and have been promoting delivery services.
The Central Bank of Kenya announced a raft of measures in March to facilitate increased use of mobile money transactions instead of cash, further boosting the growth of online trade.
