This archive report was first published on 23 August 2019.
On August 23, 2019, Google East Africa Public Policy and Government Relations Lead Michael Murungi expressed concerns over the proposed taxation of online businesses in Kenya. The Finance Bill, 2019, aims to impose income tax on online businesses in the country, which could put Kenya at odds with other jurisdictions and potentially spark a trade war.
According to Murungi, the proposed tax defies international tax policies, where companies pay the bulk of their corporate taxes in the countries where the product and services are created rather than consumed. He warned that such a move would 'chip away from the international consensus-based system on how taxation could proceed' and 'escalate in terms of trade wars.'
Technology rights defenders also criticized the proposed tax, arguing that it would criminalize the use of the Internet and erode gains made in the country. Executive Director Content Development and Intellectual Property Trust Alex Gakuru stated that 'there is no universal consensus on what is a digital marketplace,' and that the proposed Act creating VAT and income tax on a digital marketplace is 'unprecedented.'
Fintech Institute Chairman Stephen Nduati called for more research before such taxation, emphasizing the need for a thorough understanding of the digital marketplace.
