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Kenya to Introduce 1.5% Tax on Online Marketplace Purchases

May 5, 2020, 10:37 AM

Kenya plans a 1.5% digital tax on the value of online transactions, according to proposals in the Finance Bill 2020, cashing in on a nascent industry taking off amid the coronavirus pandemic.

The government in East Africa’s biggest economy will also start levying a minimum gross sales tax of 1% and proposes a minimum tax for all companies. The draft measures will be presented to the National Assembly for a first reading on Wednesday.

The minimum tax will require even loss-making firms to remit tax based on their sales, according to Daniel Ngumy, a partner and head of the tax department at Anjarwalla & Khanna, a Nairobi-based law firm.

Other highlights:

  • The Capital Markets Authority will license and regulate private equity and venture capital firms seeking access to public funds such as pensions.
  • The bill proposes to establish a three-year voluntary tax disclosure program through which taxpayers can disclose unpaid tax liabilities in exchange for some relief on penalties and interest.
  • A 2.5% duty on the customs value for goods manufactured in export-processing zones that are sold in the domestic market.
  • The Retirement Benefits Authority will receive powers to penalize pension funds that fail to submit actuarial valuation reports within the specified periods.

To contact the reporter on this story:
David Herbling in Nairobi at dherbling@bloomberg.net

To contact the editors responsible for this story:
David Malingha at dmalingha@bloomberg.net

Helen Nyambura, Gordon Bell

© 2020 Bloomberg L.P. All rights reserved. Used with permission.

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