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Additional tax slapped on digital irks Kenyans

Kenya , 12 Jun 2020

Based on the official budget and Finance Bill 2020 outlined in Kenya’s parliament, it is clear authorities fully intend to enforce taxes placed on digital products and services, with industry experts describing the move as retrogressive to the economy.

After Kenya’s Revenue Authority drafted a proposal to apply Value Added Tax (14%) on to digital products and services, such as cab hailing, OTT products including Netflix and e-commerce, the Treasury seeks to slap another 1.5% income tax on these companies.

The government is seeking ways to expand the tax bracket due to the huge amount of external debts it has to pay in the next financial year.

Cabinet Secretary in charge of Treasury, Ukuru Yatani said that his ministry proposes to add the income tax on every transaction done online.

However, industry professionals worry the taxes could hamper the growth of digital commerce and expose customers to privacy issues.

“Every Kenyan needs to be aware of the ongoing legislation on digital tax. Much as I respect our leadership, it angers me that our country's in debt (so forget sovereignty), and will soon have more tax laws, a noose that will choke a digital economy still figuring itself out,” tweeted Huston Malande, Founder of CEO of digital agency Skyline Design.

He added that, “You already know what this means. In spite of a Data protection act being passed late last year, there goes your privacy. How will the digital companies submit tax without submitting the list of individuals that made purchases? Theoretically, the govt will know it all.”

Malande noted that the country’s digital marketspace is barely hitting 5% of transactions and wondered why this was the time to stifle the digital growth.

Eric Hersman, co-founder of Ushahidi and iHub has the same sentiments. “Bad debts, short-term thinking, and greed are going creating a real problem for our promising and growing tech industry in Kenya,” he tweeted.

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