This archive report was first published on 12 September 2019.
The Kenya Revenue Authority (KRA) has initiated the process of implementing a digital tax by inviting bids for a new system to monitor online transactions between merchants and their customers.
According to the KRA, the new system will enable the authority to track and audit transactions between local and international merchants and their customers in Kenya.
The system will also provide an integrated payment gateway solution to identify and authorise payments through the settlement of data to and from merchants' online portals to their banks.
As reported in the Finance Bill, 2019, the introduction of taxes on digital economic activities is aimed at increasing revenue collection following a Sh100 billion shortfall last year.
However, the move has been met with criticism from some stakeholders in the industry, who argue that it could raise the cost of products and services in the country and precipitate a price war.
Google, a tech giant, had previously expressed concerns over the digital tax, stating that it amounts to double taxation and could have negative implications for the economy.
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