Kenya plans to apply 1.5% tax on digital transactions

Elvis Onchwari | May 7, 2020

The Kenyan government plans to impose a 1.5 percent digital tax on the value of online/digital transactions, according to proposals in the Finance Bill 2020, in a bid to cash in on the evolving industry taking off amidst the COVID-19 pandemic.

Additionally, the Kenyan government which is currently East Africa’s biggest economy and the government also plans to start levying a minimum gross sales tax of 1 percent and proposes a minimum tax for all companies.

However, the minimum tax will require even loss-making firms to remit tax based on their sales.

The measures which have already been drafted were presented to the National Assembly for the first reading.

Other inclusions in the Finance Bill, 2020 include:

Capital Markets Authority CMA) to license and regulate private equity and venture capital firms seeking access to public funds
A 2.5% tax on the customs value for goods manufactured in export-processing zones (EPZs) that are sold in the local market
Retirement Benefits Authority (RBA) to penalize pension funds which fail to submit actuarial valuation reports within the specified periods
Establishment of a 3-year voluntary tax disclosure program through which taxpayers can disclose unpaid tax liabilities in exchange for some relief on penalties and interest