KRA has been announcing the 2021 Digital Service Tax since January 1st, 2021 when it came into effect. The Finance Act 2020 introduced DST on income from services provided through the digital marketplace in Kenya. Moreover will be applied at 1.5 percent on the gross transaction value (exclusive of VAT).
What is a Digital Market Place?
A digital marketplace is a platform enabling direct interactions between buyers and sellers of goods. Including services through electronic means. Services and goods targeted under the taxes include e-books and movies, music, and games, tickets for live events and theatres, subscription-based media including news, magazines, and digital content.
2021 Digital Service Tax – KRA
KRA is targeting to net some 1,000 businesses and persons under the new digital taxes. The tax shall be due at the time of transfer of payment for the service to the service provider. One will be subject to DST if one provides or facilitates the provision of a service to a user who is located in Kenya.
Who exactly pays the 2021 Digital Service Tax?
Resident and Non – Resident:
- Digital service providers
- Digital market place providers, or
- Their appointed tax representatives (in the case of non-residents digital service providers or digital marketplace providers without a permanent establishment in Kenya).
The 2021 digital service tax shall be applied to business-to-business (B2B) transactions. Including business-to-customer (B2C) transactions within the digital marketplace environment.
And what are the taxable services?
- Downloadable digital content including downloadable mobile applications, e-books, and films;
- Over-the-top services including streaming television shows, films, music, podcasts, and any form of digital content;
- Sale of, licensing of, or any other form of monetizing data collected about Kenyan users which have been generated from the users’ activities on a digital marketplace;
- Provision of a digital marketplace;
- Subscription-based media including news, magazines, and journals;
- Electronic data management including website hosting, online data warehousing, file-sharing, and cloud storage services;
- Electronic booking or electronic ticketing services including the online sale of tickets;
- Provision of search engine and automated held desk services including supply of customized search engine services;
- Online distance training through pre-recorded media or e-learning including online courses and training; and
- Any other service provided through a digital marketplace.
Applying for the 2021 digital service tax.
- Application for registration by non-resident digital service providers without permanent establishment shall be done through an online registration form via the iTax portal; itax.kra.go.ke/KRA-Portal/
- The User guide for the simplified registration process is accessible on the KRA Website using this link; https://www.kra.go.ke/images/publications/USERGUIDE—DST-NON-RESIDENT-REGISTRATION-REVIEWED-FINAL-18.12.2020-1.pdf
- Resident digital service providers will be required to file a payment return. Through iTax on or before the 20th of February 2021.
To learn more on new statutory provision, read now! On The Unified Payroll Return, The New 2021 PAYE rates or Everything you need to know about new PAYE rate for 2020.