Kenya’s planned Digital Service Tax came into effect at the start of 2021. The DST is part of the country’s 2020 revamped Finance Act that focused on the digital services market among other sectors.
Based on the provisions of the new tax regime, e-market transactions including cryptocurrency payments now attract a 1.5% tax.
The DST will serve as the final tax payment for non-residents and companies not domiciled in the country. Residents and companies with offices in the country will see their DST payments offset against any income taxes levied during the year.
Kenya’s policymakers say the new tax policy will have little to no effect on digital services startups in the country. The KRA also argued that the DST will ensure that foreign firms remit part of their earnings in the country to the government.
The new policy places Kenya among the group of countries officially levying taxes on crypto transactions. However, cryptocurrencies have yet to obtain any legal status in the country.
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