Nearly all online businesses in Kenya will be subjected to tax if the Finance Billion of 2020 passes in parliament. The bill proposes 1.5% income tax on gross revenues.
The bill targets online companies like Uber, Netflix, web hosting companies, software programs, electronic events ticketing and downloadable digital content. Each of these companies will be required to pay VAT or 1.5% of their gross revenues.
Though the proposals may pass in parliament, it will be hard to be implemented on some of the companies providing online services. Individuals like bloggers may not be in the bracket because it’s almost impossible for the government to determine the amount of money they generate.
The proposals were made after the government noticed that most companies have switched to online business. Even as they aspire to increase tax bracket, there are high chances the government may not meet their targets because online business is extremely complicated.
Currently, web hosting companies are subjected to turnover tax, but most of them don’t pay because they don’t own registered businesses. All they do is, buy reseller hosting services from established companies then distribute the resources to their clients. Even those already registered to offer hosting services will resort to buying reseller hosting services to avoid paying the new taxes.