Kenyan app developers to face added tax demands

The Kenyan Revenue Authority is set to target developers of income generating applications as it drafts plans to incorporate online businesses into its revenue generating eco-system.

According to reports from Business Daily, KRA plans to do this by working with the Communications Authority of Kenya (CA) to obtain transactions data by resident and foreign-based app developers doing business in Kenya.

Commenting on the decision, deputy commissioner for corporate policy, Maurice Oray said,

“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.

Working with the Communications Authority (of Kenya), we should be able to get the data. But we live in a self-assessment period and expect that if you are generating revenue of that much, you self-declare so that you don’t pay extra penalties.”

The KRA has singled out taxation of the emerging digital economy, a headache for global revenue agencies, as a major risk to meeting the Sh6.1 trillion target in the three-year period through June 2021.