DIGITAL SERVICE TAX KENYA – highlights

Digital Service Tax( DST) – This is tax payable on income derived in Kenya from services offered through a digital market place . Whereas a digital market place is a platform that enables direct interaction between buyers and sellers of goods and services through electronic means. DST came to effect in January 2021.

Rate : DST is taxed at 1.5% on the gross transaction , payable at the point of transfer of payment to the service provider

Terms : For residents and companies with permanent establishment in Kenya, it is treated as advance tax to be offset against income taxes at the end of the year. For Non residents and Non residential companies it is final tax

Businesses that offer the following services are directly affected :

  • downloadable digital content including downloadable mobile applications, e-books and films;
  • over-the-top services including streaming television shows, films, music, podcasts and any form of digital content;
  • sale of, licensing of, or any other form of monetising data collected about Kenyan users which has been generated from the users’ activities on a digital marketplace;
  • provision of a digital marketplace;
  • subscription-based media including news, magazines and journals;
  • electronic data management including website hosting, online data warehousing, file-sharing and cloud storage services;
  • electronic booking or electronic ticketing services including the online sale of tickets;
  • provision of search engine and automated help desk services including supply of customised search engine services;
  • online distance training through pre-recorded media or e-learning including online courses and training; and
  • any other service provided through a digital marketplace.

Note

Digital service tax is taxed on services  therefore for goods sold on digital or social media platforms,the suppliers are required to file for self assessment tax  i.e on VAT, TOT  or Income tax. However, commissions charged  because of the use of the digital platform is taxed under DST.

By Cpa Sammy Aloyo (CPA-K.CIFA.ACA.EMBA)

Leave a Reply

Your email address will not be published. Required fields are marked *

Open chat
1
Need Help?
Welcome to our site, how may we help?