The Kenya Revenue Authority for the last few years have experienced alot of revenue loss from online businesses.The revenue has new plans to now help curb this new challenge by pushing through with new rules that will compel all international technology giants or local businessesdoing business over the Internet to start disclosing the total revenue they generate.
The main aim of these regulations will be aimed at reducing revenue leakage through tax avoidance.Since tax avoidance is not legal, the authority has noticed that most businesses have engaged in this trade thus a huge percentage of revenue is lost. The rules and regulations are part of the modification made on Transfer Pricing Rules 2006 in the ongoing overhaul of the Income Tax Act, 1973.
The main targets for the regulations are firms such US e-commerce giant Amazon, search engine Google and Facebook, online writing, clicks among others which are believed to garner billions of shillings in profit from online transactions.
KRA outgoing commissioner-general John Njiriani noted and said, “Most (e-commerce) businesses are done on Amazon, Google and the rest.As we have seen, the bigger problem is that these institutions have the capacity to create structures that allow them to do business in many jurisdictions and get the money paid in jurisdiction of their choice. The global response has been bringing all the countries together and have a discussion.”
“That’s what we may do as a country, but we are not able to address it unless there’s a proper global response,” Mr Njiraini continued.
The agency has annually lost over 600 billion and has therefore been looking at efficient ways to this huge revenue loss from digital firms.
Early last year in March 2017, the KRA requested legislators to strategize new laws to regulate collection of taxation from taxi-hailing firms.This they did with their main target being the US-owned Uber citing reasons that the revenue given earlier was not satisfactory enough. Thus the proposal was to help link the app used by these taxi to the KRA system and therefore ensure that the authority generate sustainable profit.