KRA eyes e-commerce in income tax law shift
REVENUE: Kenya Revenue Authority (KRA) is banking on amendment of the income tax law to tap into the thriving digital economy as it seeks to widen tax base and increase revenue collection.
The deputy commissioner for corporate policy Maurice Oray said the authority is seeking to take advantage of the lucrative e-commerce business to increase revenue.
“The amendment to the Income Tax Act is basically to provide clarifications how to tax the online economy because some of the services that are given by digital platforms are invisible for VAT purposes,” he added while speaking in Mombasa yesterday during a sensitisation forum on the Finance Act, 2019.
Clear framework
Oray said before there was no clear framework to charge value added tax on this, but with the amendments, the taxman will now be able to charge such business entities.
The law, he said is targeting “a platform that enables the direct interaction between buyers and sellers of goods and services through electronic means”.
He said once amendments to the law are complete, the authority expects to get a financial windfall from the sector. “I would not competently give figures as to how much we will collect but we understand that it is a significant amount that if we amend these laws, it will improve revenue collection significantly,” said Oray.
The taxman said business entities that do not have presence in the country and are doing business deriving income supplying goods and services will need to pay taxes.
“Business entities that do business in the country and have no physical presence here will need to appoint a person to deal with their tax, we are going to implement the laws fully so as to net more taxes,” said Oray.
Central Bank of Kenya (CBK) data shows that total cash transferred through mobile platforms was Sh3.64 trillion in 2017, jumping to Sh3.98 trillion in 2018.
Similarly, the Kenya Bureau of Statistics (KNBS) analysis shows that the value of mobile commerce transactions was Sh3.2 trillion in 2017.
KRA is currently sourcing for digital service partners that will help with the creation of a system to be used by different digital economy platforms.
– Harrison Kivisu
