Kenya’s efforts to increase the reach of the taxman in the online market have received support from the World Bank.
The lender asserts that the guidelines are a step forward in the country’s effort to broaden its tax base and strengthen domestic revenue collection when acquiring money from outside sources is challenging.
According to the multilateral lender, among other measures, the implementation of Value Added Tax (VAT) on digital goods and the introduction of a withholding tax on financial derivative gains by non-residents are expected to help the country realize 0.7% of GDP, or just over Ksh93.6 billion in additional tax revenue by 2024.
The Treasury published the Value Added Tax (Digital Marketplace Supply) Regulations on October 9th 2020. The National Assembly received them on February 16, 2021. The regulations enabled the implementation of the VAT collection.
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“The government issued new VAT regulations on supplies through the digital marketplace (Electronic, Internet Digital Marketplace Supply) by providing the interpretation, scope, simplified registration framework, appointment of tax representatives, place and time of supply, accounting for and payment of tax, claim for input tax and penalties,” the World Bank’s statement read.
“These will complement the package of reforms that the government is undertaking to expand the revenue base and raise compliance by preventing evasion, corruption, and money laundering,” the bank further added.
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In the fiscal year 2023–2024, the government plans to raise Ksh2.5 trillion ($17.77 billion) through normal revenue, which will place more pressure on KRA
