KRA now goes after small, online traders

Times Tower building in Nairobi.

Kenya Revenue Authority (KRA) is turning the heat on the increasing number of businesses transacting online in what is aimed at casting the tax net wider.

In a public notice, the agency has told all taxpayers engaged in e-commerce but have neither been filing returns nor paying taxes to do so.

KRA, which has perennially failed to meet the National Treasury’s tax collection targets seems to be firing on all cylinders including going after small informal traders operating virtual shops.

The authority had collected Sh1 trillion by March out of a 12-month target of Sh1.6 trillion.

“Kenya Revenue Authority has noted that some taxpayers engage in online business and they do not file returns or pay taxes on transactions,” said the notice published in a local daily.

The taxman pointed out that, save for those who are exempt from paying taxes, every other online trader is required to pay.

“KRA would therefore like to remind taxpayers that the self-assessment regime requires them to file and pay taxes which may include: Value-Added Taxes, Excise Duty, Witholding tax, PAYE, Corporate taxes and any other obligation required under the business,” it said.

Aware that most of the businesses operating online are most likely to be small traders attracted to the cyberspace by the low costs of operations as some do not need to have a physical shop, KRA says those with revenue turnover of less than Sh5 million must pay presumptive tax.

The tax is 15 per cent of the cost of a business permit and is meant to be collected by the licensing authority. Those with a turnover above Sh5 million pay corporate tax at 30 per cent.

Although there is no data to show the number of online traders, a survey by the Kenya National Bureau of Statistics and the Communications Authority of Kenya found that only four out of 10 firms engaged in either purchasing or selling over the Internet.

The bigger the firm, the more likely it was to do business online.

“Analysis of the uptake of e-commerce by firm size shows that large firms (47.5 per cent) had the largest proportion,” read the 2016 report.  

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