List of digital services that will attract 1.5% Digital Service Tax (DST)

Beginning 2nd January, Kenya Revenue Authority (KRA) announced the introduction of Digital Service Tax (DST) that will attract 1.5% tax on digital businesses. However many Kenyans are still struggling to understand the type of businesses that will attract the above tax. So which digital services will attract the digital Service Tax?

Below is a list of digital services that will attract the 1.5% tax beginning January 2021

Services that will attract Digital Service Tax
  1. Subscription based media services such as news and magazines
  2. Online ticketing services
  3. Online Digital content such as Mobile Apps
  4. Over the top streaming services, including TV shows, films, music, podcasts, among other forms of digital content.
  5. Online distance training through prerecorded media or e-learning platforms and courses.
  6. Ecommerce platforms
  7. Sale, licensing or any form of monetizing data collected from Kenyan users.
  8. Any other service provided through a digital marketplace.
  9. Provision of search engine services and automated held desk services such as automated instant feedback services, chatbots, remote support, and service desks, including customised search engine services.

Also Read:Guide to Filing KRA ITAX Returns

So what effect will this tax have on digital businesses and what should Kenyans expect?

With the introduction of the Digital Service Tax, Kenyans should expect to see an increase in prices on most of the digital services they subscribe to. Some of the services that are expected to see a subscription fee increase include Netflix, showmax, Spotify etc. The cost of the services will see an additional 1.5% tax on gross transaction value.

KRA stated that Digital Service Tax (DST)  is payable at 1.5% of the gross transaction value and is due at the time of transfer of the payment for the service to the service provider. For residents and companies with a Permanent Establishment (PE) 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 the country, the Digital Services Tax will be a final tax.

Also Read:Applicable taxes every Kenyan must know


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Majira Media

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