Governments have been catching up trying to cash in on the digital revolution that has been the case for the past decade. Apps have become part of our life now and some of them generate income.
It seems now Kenya Revenue Authority (KRA) wants to cash in on these apps. According to Business Daily, the taxman has its sights on widening the tax net to include income generating apps,
According to the publication, KRA announced on Wednesday that app developers are staring at tax demands on downloads on their platforms and resultant revenue.
Apparently KRA will work with the Communications Authority of Kenya to obtain transactions data by foreign and resident based developers who are doing business in Kenya.
According to KRA, provision of online platforms for use by third parties is a taxable supply under the Value Added Tax Act of 2013. This means that this will attract the standard 16% levy.
The deputy commissioner for corporate policy, Mr Maurice Oray was quoted as saying that owners of these apps should pay for VAT on downloads besides other taxes under section 3 of the Income Tax act.
“If you are a resident here, you are supposed to pay the taxes the normal way. If you are not a resident but you have an app that’s being used here, your tax representative must pay your VAT and income tax,” Mr Oray said.
However, KRA has to wait for the Multilateral Convention on Mutual Administrative Assistance in Tax Matters, a treaty which allows it to exchange and get specific data on tax evaders across the world.
This move by KRA is quite similar to what Cameroon did not too long ago. In Cameroon, there is a new tax law that requires telcos to pay a certain amount for every app downloaded from their networks.