Audit Firm Exposes Loopholes in KRA’s Digital Tax


  • Audit company PwC Kenya has identified several loopholes in the Digital Revenue Service of the Kenya Revenue Authority (DST) which came into effect on January 1, 2021.

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    PwC manager and corporate tax specialist Nicholas Kahiro expressed concern over frequent cases when KRA provides digital tariff information and claims to DST without fully understanding the business model.

    “The legal dilemma includes KRA’s general position that all services provided electronically are based on DST even if there is no digital market available and KRA will issue DST notices and claim DST without fully understanding business models,” Kahiro said.

    Sign of the Kenya Revenue Authority (KRA) on the building


    He pointed out gaps between them in matters of compliance from registration to payment. He noted that this is not yet installed on the iTax platform.

    He also showed a lack of commitment to tax and revenue streams. He added that this affected online businesses and employees who basically get it from the commission.

    In addition, the audit firm questioned the interaction between the DST and the minimum tariff, stating that the KRA did not specify whether the DST could be used to end the minimum tariff.

    Lower tariffs apply to all traders whether they make a profit or not. Authorities charge one percent of total sales for all businesses. However, because of ongoing court cases, lower taxes have been suspended.

    The last version, the company noted, is that DST returns are set up on iTax as a payment and not as a monthly payment.

    The KRA, however, denied the allegations in a statement sent to kenyagist.com. Authorities found that the iTax platform had been upgraded to enable taxpayers to register and pay taxes.

    In addition, the KRA confirmed that Finance Act 2020 section 12E had clearly defined the scope of digital service tariffs.

    “Digital service means any service provided or delivered in the digital market; digital service provider means a person who provides digital services through the digital marketplace and the platform means any electronic use that allows digital service providers to connect with users of those services directly and indirectly and includes the web or software. mobile, “read section 2020 of the Finance Act.

    Digital service is a new tariff, paid for by all residents and non-residents earning income in Kenya through the digital market. KRA charges 1.5% of the total purchase guarantee.

    The Authority is currently targeting Ksh5 billion from DST revenue by the end of June 2021.

    A person photographed while working on his personal computer.A person photographed while working on his personal computer.

    A person photographed while working on his personal computer.




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