The Digital Service Tax was incorporated into the Income Tax Act after President Uhuru Kenyatta assented to the Finance Act 2021 on June 29 this year.
Since inception and subsequent gazettement, the DST was aimed at growing the government’s tax base.
Some of the changes made by the KRA following the implementation of the changes include non-residents earning income from delivery of services on digital platforms remitting the Digital Service Tax every month.
The changes also require that all vendors trading in the digital market-place in Kenya register for KRA Personal Identification Number (PIN).
KRA has noted that the DST tax is due on 20th of every month derived or acquired from Kenya following the month in which the digital services were provided.
The DST earlier applied to both residents and non-residents who fell under the bracket of Digital Service Providers, Digital Marketplace Providers and Appointed Tax Representatives.
According to KRA, only non-resident individuals and any resident who provided services subject to DST between January and June 2020 will be required to comply and pay tax due.
In the changes, resident individuals will be exempted from DST.
The changes also include amendments to the scope of income that is subject to DST to include DST income from businesses carried out over the internet or an electronic network, including any platform that enables direct interaction between buyers and sellers of goods and services by electronic means.
Another addition, non-residents will now be able to use foreign currencies when carrying out business over the internet including a digital marketplace which simplifies compliance for non-residents.
The incomes that are exempted from the DIT are incomes subject to Withholding Tax, Online services provided by Government institutions and non-resident person who is in the business of transmitting messages via radio, cable, optical fiber, television broadcasting, internet satellite or other such methods of communication.