Kenya Revenue Authority (KRA) collected Shs 5.328 Billion from the digital economy in the financial year 2022/2023.
This is a 207.9% growth compared to the same period in the financial year 2021/2022.
According to KRA, Digital Service Tax (DST) and VAT on Digital Market Supply (DMPT) have brought inclusivity in the payment of taxes, especially from Non-residents. The tax man began collecting DST in January 2021 targeting revenues earned by digital service providers like Google, Netflix, Meta, Twitter and even Microsoft.
Resident and non-resident entities who offer digital services that are within the scope of DST in Kenya became liable to DST payable at a rate of 1.5% of the gross transaction value, effective from 1 January 2021. DMPT on the other hand became payable at the standard rate, currently 16% on the value of the taxable services offered by a non-resident digital marketplace to a customer who is resident in Kenya.
The law defined “digital marketplace supply” as any supply of a service made over a platform that enables the direct interaction between buyers and sellers of services through electronic means. It has a wide scoop of taxable services from downloadable digital content to subscription-based media.
KRA then started collecting taxes from any firm whether they had a residence in the country or not as long as their digital content is paid for through a Kenyan bank, credit card or SIM card and delivered to a local IP address.
eTIMS and Betting revenues
At the same time, KRA says it has onboarded a total of 95,732 VAT-registered taxpayers to the recently launched Electronic Tax Invoice Management System (eTIMS). The system, it says led to remittances of Shs 272.365 Billion
‘’Revenue performance outlook is expected to improve further upon enhanced uptake of eTIMS. In addition, eTIMS is also expected to achieve simplified return filing through prepopulated VAT returns.’’ KRA said in a statement.
Integration of betting and gaming companies into KRA tax system also saw it collect Shs 15.190 Billion in Excise Duty and Withholding Tax from 28 taxpayers that have been on-boarded.
Overall, KRA has maintained an upward trajectory in revenue collection, after recording a 6.7% growth in the financial year. Revenue collection has progressively increased in the last 5 years from Shs. 1.58 Trillion in FY2018/2019 to Shs. 2.166 Trillion in FY2022/23, representing a growth of 37% (Shs 586.259 billion) in the last five years.
Despite an economic slowdown occasioned by an unfavourable global fiscal environment, KRA recorded a revenue collection of Shs 2.166 Trillion for the period July 2022 – June 2023 compared to Shs. 2.031 Trillion in the last financial year. The collection for the financial year 2022/2023 was therefore higher than what was collected in the financial year 2021/2022 by Shs 135 Billion.