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Kenya Digital Services Tax

A new Digital Services Tax (DST) recently passed in Kenya. The Kenya Finance Bill 2020 introduced a new DST on income from services provided through the digital marketplace in Kenya at the rate of 1.5% on the gross transaction value.

According to the new Act, the DST will apply to the income of a resident or nonresident person derived or accrued in Kenya from the provision of services through a digital marketplace.  One will be subject to DST if one provides or facilitates provision of a service to a user who is located in Kenya.  

A user of a digital service is deemed to be located in Kenya if any of the following parameters are present:

  • The user accesses the digital interface from a computer or other electronic devices located in Kenya;
  • Payment for the digital services is made using a credit or debit facility provided by any financial institution or company in Kenya;
  • The digital services are acquired using an internet protocol address registered in Kenya or an international mobile phone country code assigned to Kenya;
  • And/or the user has business, residential or billing address in Kenya.

Some digital services affected include:

  • Streaming and download services of digital content;
  • Provision of a digital marketplace, website or other online applications that link buyers and sellers;
  • Subscription-based media including news, magazines and journals;
  • Electronic data management including website hosting, online data warehousing, file-sharing and cloud storage services;
  • Supply of search-engine and automated help-desk services including supply of customized search engine services;
  • Tickets bought for live events, theaters, restaurants, etc. purchased through the internet;
  • Online distance teaching via prerecorded medium or e-learning, including online courses;
  • And any other service provided or delivered through an online digital or electronic platform excluding any service whose payment is subject withholding tax under section 35 of the Act.  

The new regulation is expected to come into effect on January 1, 2021.  The Commercial Service in Kenya is engaged with U.S. industry and relevant government agencies and is monitoring the role out of and potential updates to the DST.  For more information, please contact CS Kenya at: Janet.Mwangi@trade.gov