[kictanet] Kenya:- Kenya Finance Bill 2019:- Taxation of digital economy
Ali Hussein
ali at hussein.me.ke
Thu Aug 8 06:43:32 EAT 2019
Ephraim
This is an important topic. I suggest that we take this one seriously. We
must prepare a substantive response to the bill and make our
representations super clear.
Regards
*Ali Hussein*
*Principal*
*AHK & Associates*
Tel: +254 713 601113
Twitter: @AliHKassim
Skype: abu-jomo
LinkedIn: http://ke.linkedin.com/in/alihkassim
<http://ke.linkedin.com/in/alihkassim>
Any information of a personal nature expressed in this email are purely
mine and do not necessarily reflect the official positions of the
organizations that I work with.
On Wed, Aug 7, 2019 at 8:08 PM Ephraim Percy Kenyanito via kictanet <
kictanet at lists.kictanet.or.ke> wrote:
> *Kenya:-* Kenya Finance Bill 2019:- Taxation of digital economy
>
> In order to tap into the fast growing digital economy, the Bill proposes
> to tax income accruing through a digital marketplace by introducing a new
> charging section.
>
> Although this is a welcome move to increase the tax base, it is still not
> clear how international digital platforms with no physical presence in
> Kenya will be taxed. In this regard, it is expected that special rules may
> soon be formulated detailing the operational mechanics of how taxation of
> the digital economy will be undertaken. (It can be found here:-
> http://www.parliament.go.ke/sites/default/files/2019-07/Finance%20Bill%2C%202019_compressed.pdf
> )
> Below are the relevant portions of the proposed laws:
>
>
> -
>
> Section 3: Section 3 of the Income Tax Act is proposed to be amended
> by inserting the words highlighted:
> -
>
> (1). Subject to, and in accordance with this act, a tax to be known
> as income tax shall be charged each year of income upon all the income of a
> person, whether resident or non-resident, which accrued in or was
> derived from Kenya
> -
>
> (2). Subject to this Act, income upon which tax is chargeable under
> this Act is income in respect of
> -
>
> A. Gains or profits from:
> -
>
> Any business, for whatever period of time carried on;
> -
>
> Any employment or services rendered;
> -
>
> Any right granted to any other person for use or occupation
> of property;
> -
>
> B. Dividends or interest
> -
>
> C. a pension, charge or annuity; ii. Any withdrawals from, or
> payments out of, a registered pension fund or a registered provident fund
> or a registered individual retirement fund; and (iii) any withdrawals from
> a registered home ownership savings plan
> -
>
> D.income chargeable to tax includes income accruing through a
> digital marketplace
> -
>
> e. ‘Digital marketplace’ means a platform that enables the
> direct interaction between buyers and sellers of goods and services through
> electronic means
> -
>
> E. AN amount deemed to be the income of any person under this
> Act or by rules made under this Act;
> -
>
> F. Gains accruing in the circumstances prescribed in, and
> computed in accordance with, the Eight Schedule
> -
>
> G. Subject to section 15(5A), the net gain derived on the
> disposal of an interest in a person, if the interest derives twenty per
> cent or more of its value, directly or indirectly, from immovable property
> in Kenya; and
> -
>
> H. A natural resource income
> -
>
> Section 5 of the Value Added Tax Act, 2013 is proposed to be amended
> by inserting the words highlighted
> -
>
> 1. A tax, to be known as the value added tax, shall be charged in
> accordance with the provisions of this Act on -
> -
>
> (a). A taxable supply made by a registered person in Kenya
> -
>
> b. The importation of taxable goods; and
> -
>
> c. The supply of taxable services
> -
>
> 2. The rate of tax shall be:
> -
>
> A. in the case of zero-rated supply, 0% or
> -
>
> In the case of goods listed in section B of the first schedule 8%
> -
>
> In any other case, 16% of the taxable value of the taxable
> supply, the value of imported taxable goods or the value of a supply of
> imported taxable services.
> -
>
> ...7. The provisions of subsection (1) shall be applicable to
> supplies made through a digital marketplace
> -
>
> 8. For the purposes of this section, a ‘digital marketplace’ means
> a platform that enables the direct interaction between buyers and sellers
> of goods and services through electronic means
>
> --
> Best Regards,
> Ephraim Percy Kenyanito
> Digital Program Officer
>
>
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