Kenya Revenue Authority to tax income generated from mobile app downloads ▷ Kenya News

- The taxman says the authority will rely on CA to obtain data on transactions by foreigners and local developers

- Local developers making KSh 5 million in annual sales will be required to apply for VAT obligations

- However, the tax wont be implemented before lawmakers ratify the “Multilateral Convention on Mutual Administrative Assistance in Tax Matters”

Kenya Revenue Authority (KRA) is now set to tax income generated from mobile application downloads as part of wider plans to rope online businesses into the tax net.

The taxman said he will rely on Communications Authority (CA) to obtain data on transactions by both foreigners and local app developers doing businesses in the country.

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Kenya Revenue Authority headquarters at Times Tower building. Photo: Nation
Source: UGC

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The agency's deputy commissioner for corporate policy, Maurice Oray, said the online platforms for use by third-parties are taxable under the Value Added Tax (VAT) Act 2013, besides other taxes under Section 3 of the Income Tax Act.

“VAT applies on those apps because you are providing a service which is not zero-rated or exempted,”

“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 (a requirement under Section 16 of Tax Procedures Act) must pay your VAT and income tax,” said Oray.

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A standard levy of 16% will be applied and those developers who make more than KSh 5 million in sales will be required to apply for VAT obligations in addition to 30% corporate tax for locals and 37.5% for foreigners.

For developers that make less than KSh 5 million they will be required to pay a 15% presumptive tax for a single business permit to be issued by county governments.

For individuals, income tax ranges from 10% on the first KSh 147,580 annual income, rising to 30% for income above KSh 564,709.

However, the taxman will have to wait for lawmakers to ratify the “Multilateral Convention on Mutual Administrative Assistance in Tax Matters”, for it to get specific data on tax evaders.

Mobile application developers to pay tax on income generated from application downloads. Photo: The Star
Source: UGC

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Despite the radical measures to net tax evaders, online businesses have proven to be challenging in the global business environment.

In 2018, there was uproar in Uganda after the taxman slapped 200 Ugandan shillings tax per day for use of social networking platforms such as Facebook, Twitter and WhatsApp, a move that saw internet subscriptions fall in the first three months of its implementation.

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Source: Tuko.co.ke