The Kenya Revenue Authority (KRA) has announced that the newly introduced Digital Service Taxes (DST) requires all influencers doing business on digital platforms to pay tax.
The authority observed that an increasing number of influencers do not file tax returns or pay taxes on transactions.
The statement read in part, “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.”
KRA defines an influencer as an individual who commands a following through a media platform through the products or services they use or engage in to boost fame or drive sales.
DST was introduced by the Finance Act 2020 and it is to be applied on income from services provided through the digital marketplace in Kenya.
It 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,” the authority added.
KRA stated last week that it was targeting over 1,000 businesses and individuals under the new digital taxes.
The business or individual will be subject to DST when providing or facilitating the provision of a service to a user in Kenya. The tax shall be due at the time of transfer of payment for the service to the service provider, the authority added.
Key stakeholders have shown concerns about the exact scope of the transactions that fall under the purview of new tax and the mechanism through which KRA would collect and administer it.
The authority clarified that 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.
However, it will be a final tax for non-residents and companies without a permanent establishment in Kenya.
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