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Kenya: State Urged to Revise Tax Law On IT Software
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Business Daily (Nairobi)
12 May 2008
Posted to the web 12 May 2008
Okuttah Mark
The ICT sector is calling on the government to revise a tax structure that appears to penalise software developed locally.
Local software is charged value added tax at 16 per cent while imported software is zero rated. Health Data systems executive officer Isaiah Okoth says the tax structure makes locally developed software more expensive, creating demand for software developed outside the country.
"The government should consider removing the tax on software. Both local and imported software should be zero rated to make the industry grow," said Mr Okoth. Countries like India developed their software industry under a zero tax regime before introducing import taxes to protect the sector.
Developers have also raised concern over intellectual property rights after losing their innovations to marketers who sell the products without paying royalties. Some innovators, however, have managed to protect their software through a number of incubation centres in the country.
ICT Board chief executive Paul Kukubo says the concerns will be addressed through the ICT Bill which is due for discussion in Parliament. Mr Kukubo has also asked those in the industry to form an association through which they can lobby for policy interventions.
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Currently, it is difficult to know how many organisations are developing software locally since they are not coordinated. The sector has also been urged to developed standards, start developing high end software, and have quality assurance and project management mechanisms that would ensure their business stands the test of time.
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