Social Media Influencers in Kenya to Pay Digital Service Tax

Kenya Revenue Authority (KRA) has announced the introduction of a new Digital Service Taxes (DST) which all influencers doing business on digital platforms will now have to pay.

The taxman noted in a public notice, that there now are increasing numbers of influencers who do not file tax returns or pay taxes on transactions.

“Social media influencers will be liable to pay digital service tax since their income is derived from or accrued from the provision of services through a digital marketplace or by providing digital advertising services in Kenya,” the statement read in part.

The taxman described an influencer as a person who commands a large following on social media platforms through the products or services they use or engage in to drive sales or merely for fame and popularity.

The 2020 Finance Act introduced DST on income from services provided via the digital marketplace in Kenya and will be applied at 1.5 per cent on the gross transaction value (exclusive of VAT).

“Kindly note the tax will be collected and remitted by agents appointed by the commissioner of Domestic Taxes,” Kenya Revenue Authority added.

The authority said last week, that it was targeting it was targeting more than 1,000 businesses and persons under the new digital taxes, adding that the tax shall be due at the time of transfer of payment for the service to the service provider.

A person will be subject to DST if they provide or facilitate provision of a service to a user who is located in Kenya.

Key stakeholders have since been eagerly waiting to see how the Kenya Revenue Authority would implement Digital Service Tax under the Finance Act 2020.

The exact scope of the transactions that fall under the ambit of new tax and the mechanism through which KRA would collect and administer it, has since raised lots of concern among Kenyans.

According to Kenya Revenue Authority, for residents and companies which are permanently established in Kenya, the DST will be offset against the income taxes which is due in the year of income.

As for companies and non-residents without a permanent establishment in Kenya, DST will be a final tax.

The regulations have listed out a number of transactions taking place on digital platforms that attract the new tax.

Many have argued that social media influencers in Kenya are not high income earners, and in some instances push political agenda, further questioning if the tax will fall on the politicians themselves.

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