Services under the digital service tax (DST) 2021
Fistly, in order to address the changing business models in a digital-first world and to expand the tax base, the Digital Service Tax (DST) was introduced by the Kenya Revenue Authority(KRA). Moreover, this tax is payable by any person who derives income from services through a digital marketplace at the rate of 1.5% of the gross transaction value according to KRA effective January 2021.
Therefore, the Digital Service Tax for the preceding month is payable on or before 20th of the next month. For instance, March Digital Service Tax payment is due on or before 20th April for income accrued from services offered through a digital marketplace for the month of March.
How to file for Digital Service Tax Yourself on iTax Online platform
- Log in to your iTax profile
- Click on Payment Registration on the landing page or on the Payments drop down menu
- Proceed to the next step
- An e-payment registration form will be displayed
- Follow the sequence: Income Tax>Digital Service tax>Self-Assessment Tax>Tax period (Year and Month)
- Follow with your Monthly Turnover Value and select your payment method.
- Select your payment method and confirm your details.
- Complete the payment process through your preferred payment method.
Services under the DST
With the introduction of the DST, services that are offered through online marketplaces are expected to experience higher prices to reflect the impact of the digital tax. For residents and companies with a Permanent Establishment in Kenya, the DST will be an advance tax to be offset against the income taxes due in the course of the financial year. In the case of non-residents and companies without a Permanent Establishment in Kenya, it would be collected and remitted by agents appointed by the commissioner of domestic taxes.
To sum up, the following services attract Digital Service Tax according to Kenya Revenue Authority:
Services and Goods Targeted Under the Digital Service Tax
- Subscription-based media including news, magazines and digital content.
- E-commerce platforms.
- Online ticketing services.
- Provision of search engine services.
- E-learning platforms offering online distance training.
- Sale, licensing or other forms of monetizing data collected from Kenyan users.
- Streaming services among other forms of digital content.
- Any other service provided through a digital marketplace.
In conclusion, it is estimated small and medium enterprises account for more than 80 percent of all the jobs in the country and about 30 percent of the annual gross domestic product hence the push to cast a wider tax net. Through myNGOVO Advance you can be able to reduce your cash flow issues by accessing salary advance when you need it.