Kenya is targeting American tech companies with its newly introduced Finance Act 2020. This bill signed by President Uhuru Kenyatta, imposes a 1.5 percent tax on the gross transaction value of digital services in addition to the already high 14% VAT on digital goods and services introduced in 2019.
The Kenya Revenue Authority (KRA) has already set up a new department to track revenues generated by foreign companies from every digital transaction within Kenya and in order to collect tax payments.
KRA’s deputy commissioner of policy and taxation, Caxton Masudi, uses the same false narrative to justify the discriminatory tax as his French or European counterparts:
“To ensure that the digital market sector pays its fair share of taxes, KRA has set up a dedicated unit to facilitate the taxpayers in this sector in the determination and accounting for taxes.”
The new regulations from the Finance Act 2020 also empowers the Commissioner of Income Taxes at the Kenya Revenue Authority to appoint agents for the purpose of collection of the digital services tax.
Kenya expects to generate $19 million annually through this new tax. The proposed measures are anticipated to come into effect on January 2021.