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1.5 percent digital services tax takes effect in 6 months time

President Uhuru Kenyatta signing the 2020 Finance Bill

The Digital Marketplace Supply Regulations, 2020 tax will come into effect early next year.

This after President Uhuru Kenyatta assented to the 2020 Finance Bill on Tuesday. This now means that Subscription-based media including news magazines, streaming of television shows, music and podcasts will now be the subject of value-added tax (VAT) of 1.5 per cent.

Other passed tax proposals expected to take effect on January 1, 2021 include the the extension of the upper limit of the residential income tax paid by landlords from Ksh.10 million to Ksh.15 million.

Notable taxes taking effect immediately include the lowering of the threshold on excise duty charged to beer and spirits by alcohol strength from over 10 percent to six percent, a factor set to raise the prices of some beers and spirits.

The controversial one percent minimum tax on the gross turnovers of loss making firms is also included as part of the bill.

The pain of this tax  is that despite the unfavourable economic conditions, pampered by World Bank lies that Kenya is doing good in the ease of doing business, the businessman competing against those who can easily raid the public coffers, is forced to pay tax on their meagre earnings.

Both the President and the National Assembly agreed with Treasury’s plan to moot loopholes in tax mobilisation.

In total, the bill has sort to raise Ksh.38.9 billion in new tax revenues to further anchor funding for the Ksh.2.79 trillion net spending by government in the new financial year commencing July 1st.

The Bill, now an Act of Parliament further contains the Ksh.56.6 billion economic stimulus package that contains key funding on eight thematic areas including tourism and SMEs as measures to guide the economy’s rebound.


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