New Tax Set to Raise Prices for Streaming and E-Learning Services.
Kenyan consumers are bracing for higher costs on streaming and e-learning services following the introduction of a 15 per cent excise duty on digital services provided by non-resident companies.
The new tax seeks to establish fairness by ensuring non-resident digital service providers comply with the same excise duty obligations as local businesses. This measure complements earlier initiatives aimed at broadening Kenya’s tax base, such as:
| Tax Initiative | Implementation Year | Rate |
|---|---|---|
| Digital Services Tax (DST) | 2021 | 1.5% |
| Value Added Tax (VAT) on Digital Services | 2021 | 16% |
By introducing this tax, the government aims to align taxation practices while enhancing revenue collection.
Audit firm KPMG highlighted that while the policy is intended to level the playing field, it will likely increase operational expenses for non-resident providers.
These providers may transfer the additional costs to end-users, resulting in higher subscription fees and service charges for Kenyan consumers. Such cost increases may limit access to digital services in Kenya, a country known for its rapidly expanding digital economy.
Money Transfers and Advertising
The excise duty applies beyond streaming and e-learning, extending to:
- Money transfer fees
- Banking services
- Telecommunications
- Betting and gaming
- Advertising
Potential Consequences:
- Increased digital transaction costs.
- Reduced financial inclusion.
- Lower transaction volumes as users turn to cheaper alternatives.
These outcomes could ultimately reduce government revenue despite the tax’s objective to expand the fiscal base.
Compliance and Penalties
Strict compliance measures accompany the new tax policy:
- Licensing Requirements: Providers must obtain an operating license from the Commissioner.
- Non-compliance Fine: Sh100,000 monthly until licensed.
- Payment Deadlines:
- Betting and gaming excise duties are due within 24 hours of daily transactions.
- Other duties must be remitted by the 20th of the following month.
The penalties aim to ensure adherence while encouraging timely payment of taxes.
Read Also: How Ruto Plans to Register 15 Million Learners in Taifa Care Within 90 Days
Conclusion
While the 15 per cent excise duty aims to create equity and boost government revenue, it may inadvertently raise costs for consumers and businesses, potentially hindering access to digital services in Kenya’s growing economy.
New Tax Set to Raise Prices for Streaming and E-Learning Services
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