WHAT ABOUT THE FINANCE ACT, 2023.?

 Assented on 26th June 2023, Came into Force on 1st July 2023, while some amendments were earmarked for implementation on 1st September 2023 and 1st January 2024 respectively.

Through this enactment, an alteration was made to the Income Tax, Value Added Tax(VAT), and Exercise duty regime, not to mention the administration of taxes in Kenya to implement the Government of Kenya's budgetary and fiscal measures for the 2023-2024 Financial Year.

INCOME TAX.

The Finance Act amended the Income Tax Act (Cap 470) as hereunder:

  1. Taxing the Digital Economy- Digital Asset Tax.   Effected from 1st September 2023, it applies to income from the transfer or exchange of digital assets,( defined as anything of value that is not tangible such as cryptocurrencies, Non-Fungible Tokens (``NFTs'') token codes, and any digital representation of value that can be exchanged, stored or transferred electronically.
  2. Withholding Tax on Digital Content-  Effected on 1st July 2023. Applicable on payments made by resident persons to both resident and non-resident digital content creators, which are deemed to be income accrued in or derived from Kenya. The resident's rate is 5% and 20% for non-residents. It is required to be remitted to the KRA  within 5 working days of deducting withholding tax and making payment for the monetized digital content.
WHAT CONSTITUTES DIGITAL CONTENT UNDER THE ACT?
  • Any entertainment, social, literal, artistic, educational, or any other material electronically offered for payment through any medium or channel. This includes advertisements, social media promotions, brand endorsements, affiliate marketing, subscriptions, brand endorsements, affiliate marketing, subscriptions for online content, licensing digital content, and commissions earned by creatives from crowdfunding.

  • This new withholding tax has widened the tax base to include income from Kenya's growing digital creative economy. However, the revised remittance timelines will likely introduce a punitive compliance burden on ordinary Kenyans when making numerous low-value payments or subscriptions to consume digital content from content creators.
       Disclaimer:
        
       This article is for informational purposes only and should not be construed as a legal opinion.
        Any queries or clarifications should be addressed to the undersigned.
         
        Wakili Wangu kimure 
         kellenkimure@gmail.com
         0716912966
        Shiv Plaza, 2nd Floor Nakuru.

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