Non-residents earning income from delivery of services on digital platforms will now be required to remit Digital Service Tax (DST) every month as stipulated in the Finance Act 2021, the Kenya Revenue Authority has announced.
Also, vendors trading in the digital marketplace in Kenya will be required to register for KRA Personal Identification Number (PIN) in the changes announced by the taxman.
The digital services tax rate is 1.5 percent of the gross transaction value. The gross transaction value is the payment received as consideration for the digital service. In the context of a digital marketplace provider, the transaction value is the commission or fee paid for the use of the platform.
Initially, both resident and non-resident individuals were to pay DST, but now resident individuals will be exempted from DST according to changes by KRA.
However, any resident who provided services subject to DST between January and June 2020 will be required to pay any tax due.
Incomes exempted from DST include incomes subject to Withholding Tax, Online services provided by Government institutions and non-resident person who is in the business of transmitting messages via radio, cable, optical fiber, television broadcasting, internet satellite or other such methods of communication.
The digital tax, which took effect on January 2, 2021 will affect subscription based media including online news and magazines subscriptions as well as online ticketing services.
Mobile apps, ebooks and films will also attract the tax among the following items.
- Streaming services for TV shows, films, music, podcasts and other available digital content.
- Provision of search engine services, chatbots, remote support, instant feedback services and customized search engine services.
- Licensing, sales and other forms of monetizing data collected from Kenyan users.
- Online training delivered through pre-recorded media or e-learning platforms and courses.
- Any services provided through the digital marketplace.
DST is due on the 20th of every month derived or acquired from Kenya following the month in which the digital services were provided.