In Kenya, the revenue authority has in the past expressed its frustrations in imposing taxes on some of the multinational e-commerce companies.
Currently, certain digital services attract 16 per cent VAT in Kenya if a foreign supplier provides electronic services to a VAT non-registered customer in Kenya.
However, the existing VAT and Income Tax Act provisions have been insufficient in setting out a strict tax framework for ecommerce companies operating in Kenya.
Internet is arguably the most popular channel of communication in today’s modern world. This has led to evolution of the e-commerce industry where most businesses have embraced digital platforms to market and sell their products.
With such a lucrative multi-billion dollar industry, discussions around introducing digital taxes have been rife. Policy experts have been lobbying for introduction of a “virtual Permanent Establishment (PE)” concept in the current tax laws since most of e-commerce entities lack physical or legal structures in the jurisdictions they operate in.
