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Finance Bill 2020 Proposes 1.5PC Digital Tax on Online Transactions


Kenya is planning to impose a 1.5 percent digital tax on online transactions. This is according to a proposal in the Finance bill 2020, in a bid to cash in on internet businesses that have taken off especially during this Covid-19 crisis period.

Kenya is currently East Africa’s biggest economy and the government also plans to start levying a minimum gross sales tax of 1 percent. The measures which have already been drafted were  presented to the National Assembly for the first reading on Wednesday.

According to Daniel Ngumy, Partner and head of the tax department at Anjarwalla & Khanna (A Nairobi based law firm), the proposal will require all firms, including those making losses, to remit tax based on their sales.

Read: How To Get and Use the M-Pesa Prepay Visa Safari Card

If passed into law, private equity and venture capital firms seeking access to public funds such as pensions will be licensed and regulated by the Capital Markets Authority.

The bill also proposes to establish a voluntary tax disclosure program for a period of three years. Taxpayers can disclose their unpaid taxes and in turn get some relief on interest and penalties.

Customs value for manufactured goods in export processing zones sold in the local market will also attract a 2.5 percent duty.

The Retirement Benefits Authority will have powers to penalize pension funds that do not submit actuarial valuation reports within the required period.

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Written by Vanessa Murrey

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