This is to get more from online firms that do business and make profit in the country.
The Finance Minister Ukur Yattani announced on the tax value of transactions in the budget statement for the financial year 2020/21.
The implementation of the 1.5% digital tax is expected to come into force on 1 July.
By this implementation, Kenya joins several countries that have imposed tariffs on tech giants such as Google, Twitter, and Facebook.
The US is against digital taxation. The country says it is unfairly targeted at American technology companies.
It recently launched a formal investigation into plans by 10 jurisdictions to increase the tax burden on American big tech companies. These countries include the UK, European Union, and India,
The countries have imposed a digital services tax of between 2% and 15% and risk retaliatory tariffs from the US.
The US may investigate and sanction Kenya’s tax imposition as well. It is possible that Kenya’s eligibility for duty free exports to the US under the African Growth and Opportunity Act (Agoa) may be at risk.
However, countries like France believe the tax will help prevent internet firms from diverting revenues through different jurisdictions to reduce their taxes.