KRA Introduces a Mobile App in a Bid to Tax Digital Businesses

Kenya Revenue Authority (KRA) has introduced a new mobile phone application branded KRA M-service that will enable its taxpayers to do pin registration, KRA verification, file their returns, make tax payments and allow them to transact on the go and meet their tax obligation via phone.

The taxman also says they are working with other software developers to ensure the App is up and running on App Store by the end of the year 2020.

With the new platform, KRA is seeking to widen its reach, increase revenue collection and ensure tax compliance across the country.

This comes after the National Treasury Cabinet Secretary Ukur Yatani made gazettement of the Digital Marketplace Supply Regulations, 2020 giving the KRA sector a go-ahead to net the revenues from the digital marketplace.

“These Regulations may be cited as the Value Added Tax, Digital Marketplace Supply Regulations, 2020,” Ukur Yatani said in the gazette notice released on September 25, 2020

KRA also have plans to progressively introduce new functionalities to the App i.e having a Swahili version of the App as well as introducing a USDD version of domestic taxes.

The KRA M-Service mobile App will be connected to the Integrated Customs Management System (iCMS) to allow importers and exporters do functions of filling out Customs Entry Declaration Status and Passenger Declaration Forms respectively.

The implementation will targets firms operating in the digital market space-effective from January 1st, 2021 as per the Finance Act 2020 gazetted.

James Mburu, KRA’s Commissioner General urged other sectors players, tax professionals and members of the public to submit their comments on the draft regulations to ensure wide consultation and public participation of the implementation.

Digital marketplace targets both domestic and international market places doing business with individuals or entities in Kenya and even other popular digital content and service providers.

Taxable supplies made through a digital marketplace shall include electronic services, downloaded digital content including downloading of mobile applications, e-books and movies, subscription-based media including news, magazines, journals, streaming of TV shows and music, podcasts and online gaming will also be taxed.

Other Software programs such as software downloads, drivers, website filters and firewalls will also be affected.

Tickets bought or issued for live events, theatres, restaurants purchased through the internet, the supply of digital content, transport hailing platforms, and any other digital marketplace supply, as per the regulation of the KRA act will be taxed.

The implementation of the act will also affect other online service providers such as Google, Amazon, Jumia, Netflix, and taxi hailing apps.

The Digital Services Tax will be due at the time of transfer of payment for the goods or services given out by the provider which is a 1.5% tax of the total transaction value.

The tax will be collected and remitted by agents appointed by the Commissioner of Domestic Taxes.

The new tax law will have non-resident companies that are conducting business through online platform in Kenya but are not residents of Kenya to appoint local tax representatives to account and remit the taxes on their behalf.

Companies that offer digital services in the country will be required to register for VAT or appoint a tax representative first before being allowed to operate.

Earlier, CS Yattan said that digital marketplace supplier under the regulations from an export country will be required to register under the simplified VAT registration framework.

The KRA Deputy Commissioner, Grace Wandera added that this year’s Taxpayers Month was themed to “Enhancing tax administration for economic sustainability”.

Over 100,000 Kenyans have so downloaded the KRA M-Service app so far.