Digital Tax- Kenyan Government Mulls Exempting Startups from the 1.5% Levy

The Kenyan government plans to exempt startups in Kenya from the 1.5% digital tax following an outcry from local entrepreneurs.

KBC reports that the state is considering amendments in the Finance Act 2020, which would lift the burden from young local businesses which use digital marketplaces to derive income.

ICT, Innovations and Youth Affairs CS Joe Mucheri says the digital tax targets multinational players in the country who do not pay corporate tax, and talks are underway to exempt local entrepreneurs from the tax.

The CS also says that the government plans amendments on the ICT practitioner bill which will protect startups from the digital tax.

Earlier, The Kenyan Wallstreet reported that the digital tax would require online businesses who do not have a presence in Kenya to employ local tax representatives who will remit their tax obligations. Such would help capture tax obligations for internet-based multinational like Netflix and Spotify, who do not have a permanent establishment in Kenya.