Kenyan taxman now sets his sights on online businesses in a bid to arrest tax evasion

Kenya Revenue Authority (KRA)
  • Kenya Revenue Authority (KRA) is now targeting businesses using the Internet to market and sell products in a renewed effort to reduce revenue leakage through tax evasion.
  • The taxman argues that some of the businesses, which have invested in online channels to provide services and drive sales were neither paying taxes nor filing annual returns.
  • Firms with annual revenue of more than Sh5 million are under the law required to register for value-added tax (VAT) obligation.

The Kenyan taxman has now set his sights on online businesses as he moves to curb tax evasion.

Kenya Revenue Authority (KRA) is now targeting businesses using the Internet to market and sell products in a renewed effort to reduce revenue leakage through tax evasion.

The taxman argues that some of the businesses, which have invested in online channels to provide services and drive sales were neither paying taxes nor filing annual returns.

“KRA would like to advise that unless income or supply is expressly exempt in the law, appropriate taxes should be paid,” the agency said in a statement.

"KRA would, therefore, like to remind taxpayers that the self-assessment regime requires them to file and pay taxes."

It is not however, yet clear how KRA intends to nab the ‘tax cheats’ since online businesses do not have physical addresses or legal structures in the jurisdictions they operate, making it easy to escape the taxman’s noose.

Early this year, KRA said it had invested heavily in intelligent technological systems capable of spying on transactions by businesses and homes.

Firms with annual revenue of more than Sh5 million are under the law required to register for value-added tax (VAT) obligation. This will see them charge the standard 16 percent tax on supplies, among other taxes, and remit the same to the taxman.

Those that generate less than Sh5 million a year are, on the other hand, obligated to pay presumptive tax at the rate of 15 per cent of the annual single business permit fee issued by a county government in a law enforced in January this year.

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