Proposed Tax on Digital Transactions
Kenya plans to impose a 1.5 percent digital tax on the value of online transactions and purchases as part of its efforts to fund the Budget for the next financial year.
Online transactions have surged due to restrictions on interactions and movement to limit the spread of the coronavirus, and the government is seeking to collect more taxes from that increased activity.
Finance Bill 2020
In changes to various laws contained in the Finance Bill, 2020, the government proposed to start levying a minimum gross sales tax of 1 percent and a minimum tax for all companies, including small and medium enterprises.
The proposal will also require non-profit making companies to remit taxes on their sales, which is likely to cause fear and panic amongst business owners about double-taxation.
Other proposals in the Finance Bill 2020 published on May 5 include:
- Capital Markets Authority will have the ability to license and regulate private equity and venture capital firms seeking access to public funds
- The Retirement Benefits Authority will have the ability to penalize pension funds that fail to submit actuarial valuation reports within specified time
- The establishment of a three-year voluntary tax disclosure program through which taxpayers can disclose unpaid tax liabilities in exchange for some relief on penalties and interest
- A 2.5 percent Excise Duty tax on the customs value for goods manufactured in export-processing zones (EPZ) that are sold in Kenya.