If you haven’t seen the treasury’s proposal to double the Digital Service Tax then you need to read on.
The Treasury intends to raise the digital tax service (DST) from 1.5 percent to three percent. This suggestion was made by the Cabinet Secretary through the Finance Bill of 2022, which covers the fiscal year beginning in July. The tax applies to international corporations and is levied on the sale of e-books, movies, music, games, and other digital property.
“The Third Schedule to the Income Tax Act is amended… by deleting the expression ‘one-point-five percent’ appearing in paragraph 12 (digital service tax rate) and substituting therefor the expression ‘three percent’,” Treasury Cabinet secretary Ukur Yatani.
The kind of content that will be taxable.
Electronic services and downloadable digital content like mobile apps, e-books, and movies are examples of a taxable supply made through a digital platform. News, magazines, journals, music, podcasts, and online gaming are examples of subscription-based media.
Google, Apple, Amazon, Jumia, Netflix, and Showmax are among the digital content and service providers affected. Paypal and other payment platforms are also on the list. Foreign enterprises are expected to produce Sh926 billion in gross income through Kenya’s digital marketplace, according to KRA. According to the Business Daily, the KRA is currently aiming for Sh13.9 billion in three years, from June 2024 to June 2025, for the 1.5 percent tax.
Netflix raised the price of its Premium Plan in 2021, when the Digital Service Tax was enacted into law. Will these providers respond by raising their already exorbitant premium prices once more? All we can do now is wait.