The Kenya Revenue Authority has updated its iTax system in preparation for digital tax payments which will commence in January.
KRA will start taxing individuals and firms operating in the digital marketplace using the fully integrated and automated iTax system which replaced the Integrated Tax Management System. The automated iTax system will increase revenue collection by shortening the time taken to file returns.
The iTax portal will enable users file their PAYE, VAT, Corporate Tax, Partnership Tax Returns and Excise Duty.
Digital services will attract a 1.5 percent tax based on the gross value of the transaction.Tax for Kenyans and non-residents who have established themselves permanently in the country will be offset against their income liability for that year.
KRA in September said it was setting up a special digital tax section with agents appointed for the purpose of collection and remittance of the digital taxes.
Firms and individuals operating in the digital marketplace will be required to register with KRA to ensure they remit their taxes.
Some issues that are yet to be addressed in the implementation of the digital tax in Kenya include how to deal with loss making ventures. The government is also yet to give its position on International tech giants operating in the country.
The taxable digital content includes downloadable products such as mobile applications, movies and subscription-based media, e-books, journals, magazines, new, streaming of TV shows, streaming of music, podcasts, and online gaming.
KRA is looking to collect Sh 5 billion in taxes from digital transactions within the next six months.
Failure to comply with the electronic tax requirement will cost the business a cash penalty that is double the required amount or Sh100,000 fine.