Digital service tax, popularly known as DST, was introduced in 2021. The law meant that the gross transaction value of digital services would be subject to a 1.5 percent digital tax. It went into effect in January 2021 and was payable by people getting income from the provision of services and products through the digital marketplace.
At the state, the regulation further added that for both Kenyans and non-residents with permanent establishments in the state, the tax would be available to offset against their income liability for that year.
Amendments
According to the Finance Act, 2022, some changes to DST will go into effect tomorrow, July 1.
According to an amendment, the rate of the digital service tax has increased from 1.5 percent to 3 percent.
It would appear that the government wants to net additional revenue from the digital marketplace. It has already introduced a 10 percent excise duty on imported phones, which also goes into effect tomorrow. Customers who want to buy a new SIM card or replace theirs will also be charged more following an introduction of an extra KES 50 for all SIM card purchases.
The tax will affect non-residents without a permanent establishment in the country, but source their income from the digital marketplace
On the other hand, non-residents with a permanent establishment in Kenya are also exempted from DST following a further adjustment in the bill.
This means that DST is only applicable to non-residents without a permanent establishment in the country.
As said, the new proposals have already by approved by the president, meaning they will go live tomorrow.
Even when the president signs a bill into law , it doesn’t have the force of law the following morning. It has to be gazetted and operationalized.
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