Digital Service Tax In Kenya Doubles; Takes Effect Today

Digital Service Tax In Kenya Doubles; Takes Effect Today

The Digital Service Tax (DST) doubles today in Kenya, as announced in April 2022. The DST, which was previously at 1.5 percent, has increased to 3 percent. According to Kenya’s Finance Act of 2022, the law shall take effect from 1st July 2022.

The Kenyan government introduced the tax in 2019 as a source of revenue; it became effective on 1st January 2021. and approved on 30th June 2022 by President Uhuru Kenyatta.

The digital space is a digital market space where seller-to-buyer transactions can easily take place, thus the effectiveness of the DST in 2021.

According to the Finance Act, “the amendment mandated the cabinet secretary for national treasury and planning to enact regulations for the implementation of the tax on income generated from a digital marketplace.”

Services rendered online such as:

Purchasing of Tickets,

Subscription of media content such as News, Music, or Journals,

Provision of E-learning platforms or Paid courses online and other paid-to-gratify services have been subjected to DST.

This tax increase will affect non-natives who do not have permanent residence in the country and foreign companies that offer the service of a digital marketplace to citizens.

On the contrary, non-natives with permanent residence or establishment in Kenya will not pay this tax.