Piece by: PURITY WANGUI

04 January 2023

• The new developments follow the introduction of the Value Added Tax (Digital Marketplace Supply) (Amendment) Regulations, 2022.

• Foreign traders gaining from a local-based derivative contract will also start paying a withholding tax of 15 percent.

Multinational tech firms have issued notices to customers on application of the standard 16 per cent Value Added Tax (VAT) for any online service offered.

The services include streaming movies on Netflix or listening to music on Spotify, this as the taxman sets sights on the booming digital market in Kenya.

According to Business Daily, other online services that will start attracting VAT include e-books and videoconferencing.

The new developments follow the introduction of the Value Added Tax (Digital Marketplace Supply) (Amendment) Regulations, 2022.

"Intuit UK Limited, which provides QuickBooks, recently announced to its customers that it would start levying the 16 per cent VAT on all its services," Business Daily reported.

QuickBooks said they will require a 16 per cent VAT on all online subscriptions starting on or after January 31, 2023.

In September 2022, Zoom Video Communications, which owns a virtual meeting platform, started charging the sales tax.

Foreign traders gaining from a local-based derivative contract will also start paying a withholding tax of 15 per cent.

On November 2022, Kenya Revenue Authority said it is keen on the digital economy as it puts in place measures to tap more revenues and meet its financial year obligations.

This is as the country, moves to adopt a "Digital Economy Blueprint," a framework to improve Kenya’s and Africa’s ability to leapfrog economic growth.

The document is hinged on five pillars: digital government, digital business; infrastructure, innovation-driven entrepreneurship, and digital skills and values.

The KRA has been given a target of Sh2.14 trillion in the financial year ending June 2024, with President William Ruto expecting them to better the collection overtime to between Sh4 trillion and Sh5 trillion.

"We are raising only Sh2.1 trillion in revenue which is 14 per cent of GDP. We need to raise 25 per cent of our GDP like other middle-income countries. That is between Sh4 trillion and Sh5 trillion," Ruto said.