2020 has been a strange and trying year and it seems it is going to get weirder as the months go buy.
You may or may not have heard of the proposed amendments to the Finance Bill 2020 which proposes a ‘digital service tax’. This is payable by a person whose income comes from services derived through a digital marketplace. The rate will be 1.5% of the gross transaction value and is due at the time of the transfer of the payment for the service to the service provider.
As you have noticed, there has been an explosion of services rendered online in Kenya in the past decade. People use the internet to sell virtually anything you find in local shops and the government wants to take a slice out of this market. KRA went ahead to create a unit that will track revenues in the digital economy, which shows how serious they are in getting all of this money.
Well it seems some online traders are taking proactive measures in preparation of the impending change, and they are odd.
PhonePlace Kenya which sells phones online has added this interesting disclaimer when you view a listing.
TAX COMPLIANCE REQUEST: Dear customer, for purposes of our company tax compliance, all VAT registered customers are required to give/declare their KRA pin at the shop on or before purchase
This notice ‘implies’ that you have to declare your KRA PIN at the shop before a purchase which sounds ridiculous. However, on-call, the customer care agent at the other end of the line said I do not need a PIN to buy a phone. This tax compliance request is for business purchases for companies that have registered for VAT and have an annual turnover of taxable supplies of KES 5 million per annum and above.
That notice appeared a time when we have the draft proposals on the Internet regarding taxing online businesses and it could cause confusion. Since this notice is for a specific demographic of users, this then confirms the call I made earlier where you can just purchase your phone as usual.