The Kenyan Revenue Authority (KRA) recently revealed plans to tax owners of income-generating apps that are being used by Kenyans.
A 16% value-added tax (VAT) on the value of commodities purchased will be enforced on developers who own applications with in-app purchases and apps that require you to pay before downloading.
In a business daily report, Maurice Oray, KRA’s Corporate Policy Deputy Commissioner, explains that VAT should be paid on such apps due to the fact that the service provided by the app is not zero-rated or tax-exempt.
“If you are a resident here, you are supposed to pay the taxes the normal way. If you are not a resident but you have an app that’s being used here, your tax representative (a requirement under Section 16 of Tax Procedures Act) must pay your VAT and income tax,” said Maurice Oray.
The KRA intends to facilitate the collection of taxes by partnering with the Communications Authority of Kenya (CA) to keep a close eye on all digital transactions and hook tax evaders.
Besides the VAT on downloads, local and foreign app owners — firms and individuals alike — will still have to pay income tax on their annual profits.
This report comes alongside some divisive regulations recently issued by various African countries on internet users.
In April 2018, Tanzania issued a $900 annual licensing fee for bloggers and in later in July 2018, Uganda introduced a social media tax. Uganda also recently implemented a $20 license fee on social media influencers.
Also, the Federal Inland Revenue Service (FIRS) of Nigeria is reportedly planning to introduce a 5% VAT on every online purchase.
The KRA’s plan is currently awaiting approval by the Multilateral Convention on Mutual Administrative Assistance in Tax Matters, a multilateral treaty that enables countries to exchange and get specific data on tax evaders across the world.
The tax authority is also waiting for approval from the country’s National Assembly.
Attend Techpoint SME Clinic 2020 and stand a chance to win ₦100,000 (CFA 160,000) for your business. Register now for FREE.
Techpoint is hosting an awards ceremony to reward the most outstanding players in the Nigerian startup ecosystem (2015 – 2020). You can nominate your favourite startups now.
Want more stories like this? Subscribe to the Techpoint Africa Newsletter.