This archive report was first published on 27 August 2019.
On August 27, 2019, the Kenya Revenue Authority (KRA) announced plans to tax developers of income-generating digital applications (apps) in Kenya, sparking concerns about the potential for further taxation.
According to the KRA, the tax will be levied on downloads on digital platforms and the resultant revenue. This move is part of a wider plan to rope online businesses into the tax net, with the KRA working with the Communications Authority of Kenya (CA) to obtain transactions data from resident and foreign-based app developers.
The tax has been met with skepticism, with many questioning the government's motives and the potential impact on the economy. In an interview, the author noted that taxing multimillion-dollar global corporations for the money they make in Kenya is reasonable, but expressed concerns about the government's tendency to tax everything in sight.
The author pointed out that several countries, including France and Uganda, have implemented similar taxes, but with varying degrees of success. While France's three percent tax levy on digital platforms has been successful, Uganda's misguided attempt to tax citizens for using digital platforms led to a significant decline in internet users.
The author warned that the Kenyan government's plan to tax digital platforms could be the start of a slippery slope, with further taxation and increased debt. The author questioned the government's financial management, suggesting that reducing spending and increasing efficiency would be a more effective way to address the country's financial challenges.
The author's concerns are not unfounded, given the government's history of increasing taxes and debt. The author's warning that the tax on digital platforms could lead to a decline in market and increased fuel levies, pet tax, and even a tax on breathing, is a stark reminder of the potential consequences of unchecked taxation.
