Kenya: Social Media Influencers in Kenya to Pay Digital Service Tax

(file photo).
19 January 2021

Kenya Revenue Authority (KRA) has announced that all influencers doing business on digital platforms will have to pay the newly introduced Digital Service Taxes (DST).

In a public notice, the taxman noted that an increasing number 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.

According to the taxman, an influencer is a person who commands a following through a media platform through the products or services they use or engage in to drive sales or fame.

The Finance Act 2020 introduced DST on income from services provided through the digital marketplace in Kenya and will be applied at 1.5 percent 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," KRA added.

Last week, the authority said it was targeting more than 1,000 businesses and persons under the new digital taxes.

It added that 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 provision of a service to a user who is located in Kenya.

With the introduction of the Digital Service Tax under the Finance Act 2020, key stakeholders have been eagerly waiting to see how KRA would implement it.

There have been various concerns about 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.

According to KRA, for residents and companies with a permanent establishment in Kenya, the DST will be offset against the income taxes due in the year of income.

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

The regulations have elaborated the array of transactions taking place on digital platforms that attract the tax.

Some argued that social media influencers in the country do not earn much, and in some instances push political agenda further questioning if the politicians themselves would incur the tax.

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