Journey-hailing providers, on-line freelance jobs and meals supply corporations face a steeper six % tax because the Treasury revived a proposal to lift income from these sources.
In its new proposals, the Treasury has proposed introducing a brand new important financial presence (SEP) tax at a price of six %, 4 occasions the 1.5 % that it had initially proposed underneath the digital service tax.
“The Invoice seeks to amend Part 3 of the Revenue Tax within the definition of the time period “digital market” by together with ‘ride-hailing providers”, “meals supply providers”, “freelance providers” and “skilled providers” and so forth,” the Treasury mentioned in its Tax Procedures (Modification) Invoice of 2024.
It mentioned that the proposals intention to broaden the tax base by bringing the revenue of the homeowners of the digital platforms that supply the above providers into the tax bracket.
“The proposed modification is meant to switch the digital service tax with important financial presence tax to supply taxation at 6 % versus 1.5 % underneath digital service tax. This may align the taxation of digital providers with worldwide finest observe,” the Treasury mentioned.
Launched in 2021, the digital service tax is at the moment being levied on the sale of e-books, films, music, video games and different digital content material. Which means that corporations resembling Netflix, Spotify, Amazon and YouTube, amongst others, pay the tax on their gross sales.
With the proposed adjustments, extra corporations within the digital providers house, resembling Uber, Bolt, Glovo, Jumia and others, are set to hitch the tax bracket, which is more likely to affect the fee to the top client.
The tax will solely be levied on international corporations providing these providers in Kenya, as native corporations will likely be spared as a result of they’re anticipated to pay 30 % company revenue tax on their income.
That is the second time the Treasury is making the proposal to increase this definition, the primary being within the withdrawn Finance Invoice, 2024, which sparked widespread protests throughout the nation in opposition to the proposed tax measures.
The Treasury mentioned that the SEP tax can be payable by a non-resident individual whose revenue is derived from Kenya.
“This tax shall be payable by a non-resident individual whose revenue from the supply of service is derived from or accrues in Kenya by way of a enterprise carried out over the digital market,” it mentioned.
