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Online firms seek review of digital tax citing low user transition 


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Times Tower, the headquarters of the KRA, in Nairobi. FILE PHOTO | NMG

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Summary

  • Firms including Sky Garden, Kilimall, Africa Sokoni, Jumia and Jambo shopping want the government to review the implemented tax and if not, give them a grace period before implementation.
  • The digital service tax), which came into effect at the start of this month, will be charged at a rate of 1.5 percent of the gross transaction value to both residents and non-residents firms and individuals who earn income from the online space.
  • In introducing the tax, the Treasury pointed to the steady increase in online consumer retail purchases on both local and international platforms.

Online shopping firms are lobbying for revision on the digital service tax, saying it will throttle the nascent e-commerce industry.

Firms including Sky Garden, Kilimall, Africa Sokoni, Jumia and Jambo shopping want the government to review the implemented tax and if not, give them a grace period before implementation.

The digital service tax), which came into effect at the start of this month, will be charged at a rate of 1.5 percent of the gross transaction value to both residents and non-residents firms and individuals who earn income from the online space.

In introducing the tax, the Treasury pointed to the steady increase in online consumer retail purchases on both local and international platforms.

However, some firms said that even though the pandemic has led to growth in sales through the e-commerce and adoption of the online spaces by consumers, the transition by consumers to the online platforms is still not as high as expected.

“We are still engaging with the government. We think that as much as the taxation may be beneficial to the government, the ecosystem is young and perhaps we should be given some time to grow,” Africa Sokoni CEO Ebrima Fatty said.

“However, we have done registrations but are still trying to explain why it’s not the right time.”

Products to be taxed include downloadable digital content, subscription-based media, software, data management and supply of music, film and games.

Others include search engines and automated help desk services, online tickets, e-learning platforms, audio, vision or digital media and transport hailing platforms.

The firms added that the taxation could mean loss of revenue for companies using different business models.

The KRA projects to collect more than Sh5 billion in the first six months of implementation.

Emci-Hub Technologies Ltd

By Prof. Joel Barasa

The Catholic University of Eastern Africa (CUEA) Faculty of Computer and Informatics, School of Science P. O. Box 62157-00200 Nairobi -Lang’ata Main Campus Email: joel@emcihubtechltd.co.ke Phone: +254705451853/+254769257365 LinkedIn: https://www.linkedin.com/in/joel-barasa-4a3a9a128/ GitHub: https://github.com/Barojoel Websites: https://emcihubtechltd.co.ke and https://estore.emcihubtechltd.co.ke Mr. Barasa I. Joel is a Kenyan citizen by birth. He is currently an adjunct lecturer and an IT specialist in Curriculum studies in the Catholic University of Eastern Africa (CUEA). Mr. Joel holds Post Graduate Program (EPGP) in Data Science, Business Analytics & Big Data in association with IBM which is India's first and the best Masters in Data Science from mUniversity, Aegis School of Business, Data Science, Cyber Security & Telecommunication. He also holds a Degree in BSc. Information Technology from the University of Kabianga, a Professional Certification CCNA and Data Analysis from the University of Kabianga. Joel is senior Software Developer with over 5 years worked on many projects like Kenbright Insurance, Rongo University eLearning portal, participated in integration of DHIS2 health IT systems at Kericho District Referral Hospital and served as H.O.D ICT department Okame college. Joel is an assessor and verifier in TVET CDACC curriculum implementation.

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