Kenya has joined the growing list of countries that have introduced a digital services tax (DST).
DST will be charged on digital services supplied to users in Kenya, according to specified criteria (please contact a VAT expert for full clarity on determining user location).
Authorities made provision for the DST in Kenya’s Finance Act of 2020. The move aims to broaden the tax base. It also seeks to create a level playing field for local and foreign digital services providers.
The global trend for digital services tax
Kenyan authorities noted that the rapid growth in digital services enabled businesses resident outside of Kenya to easily provide services to users inside the country.
Kenya’s move is in line with global trends. Any company providing digital services to global customers should therefore pay careful attention to the trend towards implementing digital services VAT.
In addition, the central role of digital services in the modern global economy makes it likely that nations will pursue a global framework regulating digital services VAT.
Digital services tax on streaming, hosting and more
Kenya’s DST applies to a broad array of services, including streaming services and web hosting. The tax also covers the sale of user data, ride hailing services, plus any service provided through a digital platform that is not specifically exempted. Exemptions include specified digital financial services
Authorities have set DST at 1.5% of the gross transaction value. Note that digital service providers bear the responsibility to pay the relevant digital services tax to Kenyan authorities
Note also that foreign digital service providers have the option of filing directly with the Kenya Revenue Authority or appointing a fiscal representative.
Companies providing digital services to customers in Kenya should review and, if necessary, revise their processes to ensure compliance.
A dynamic solution to global VAT compliance
Vatglobal is carefully tracking developments in digital services VAT across the world. Digital services have become central to the economy. It is therefore natural that global tax authorities will look to create regulations to effectively tax digital services.
Vatglobal’s technology-driven solution to global VAT compliance makes meeting your VAT obligations easy. Our expert team will provide up-to-date global VAT information. In addition, we will ensure you have effective processes to easily comply with all your VAT obligations.