Kenya's President Uhuru Kenyatta signed the 2020 Finance Bill on Tuesday 30 June 2020 in Nairobi. This means that the country's new digital tax will take effect from 1 January 2021. The digital tax will introduce a 1,5% fee for all online transactions that originate in Kenya.
Kenya's digital tax law defines a digital marketplace whose transactions are eligible to be taxed as "a platform that enables direct interactions between buyers and sellers of goods and services through electronic means." Known as a digital service tax, the law also states that it will be payable by any person (or organization) whose "income from services is derived from or accrues in Kenya through a digital marketplace."
In defining which services will be taxed, the law includes things such as (but not limited to) websites, online education platforms, music streaming, video streaming, ride-hailing, online shopping, and many others.
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“A person who fails to comply with the provisions of these Regulations shall, in addition to the penalties prescribed under the Act, be liable to restriction of access to the digital marketplace in Kenya until such obligations are fulfilled,” states a section of the new digital services tax law in Kenya.
The digital services tax is a move some Big Tech companies have viewed as targeting them. However, it covers not just Big Tech but all digital services and online transactions. One motivation for such a law is that Big Tech companies hardly ever pay tax on their sales profits in the African countries they operate in, introducing such a tax perhaps allows the government to ensure they pay a form of tax on their revenues and sales.
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