Home Science Technology Kenya Puts Forward Proposal for 1.5% Digital Tax and Enhanced Levies on...

Kenya Puts Forward Proposal for 1.5% Digital Tax and Enhanced Levies on Mobile Services

0
William Ruto
William Ruto

Kenya’s national treasury has put forth a proposal for a 1.5% digital tax to be levied on local platforms offering services like online job platforms, rentals, food delivery, and ride-hailing, pending parliamentary approval.

Njuguna Ndung’u, the country’s National Treasury Cabinet Secretary, has also suggested amendments to the Finance Bill 2024, requiring foreign companies with a presence in Kenya to pay digital service tax. Moreover, digital giants such as Amazon, Alibaba, and Netflix, operating without a physical presence, would be subject to the Economic Significant Presence Tax, amounting to 20% of their total income.

Additionally, the proposed bill entails raising the tax on mobile airtime and data rates from 15% to 20%, aiming to generate $2.5 billion in taxes for the fiscal year starting in July. Furthermore, it seeks to elevate excise duty on mobile money transfer fees and cash transactions in banks and financial service providers from 15% to 20%.

Telecommunication companies may respond to these increased taxes by raising transfer and withdrawal fees, potentially prompting a shift back to cash transactions. Despite projections indicating significant growth in the digital banking market, with an estimated Net Interest Income of US$19.69 million by 2024, residents operating online platforms for goods and services exchange are exempt from the digital services tax due to existing corporate income tax obligations.

Kenya’s digital services tax, effective since January 1, 2021, applies to various digital content sales, with the Kenya Revenue Agency aiming to collect Sh13.9 billion ($106 million) within three years of its implementation. The Kenya Revenue Authority plans to introduce a new transfer pricing database by April 2024 to enhance scrutiny of multinational company transactions for tax compliance and evasion.

Amidst these fiscal changes, concerns have been raised by the African Development Bank regarding potential social unrest due to increased living costs in certain African countries. Notably, other African nations have also introduced taxes in the digital sector, such as Ghana’s plans to tax resident Ghanaians’ foreign incomes and Nigeria’s consideration of telecom taxes and fiscal policies in exchange for World Bank loans.

Send your news stories to newsghana101@gmail.com Follow News Ghana on Google News

NO COMMENTS

LEAVE A REPLY

Please enter your comment!
Please enter your name here

WP Radio
WP Radio
OFFLINE LIVE
Exit mobile version