Local business operators on the digital marketplace may be in for a notable digital service tax (DST) waiver.

This follows the treasury’s push for amendments to exempt local business operators on the digital marketplace from the DST.

According to Treasury, only foreigners or non-residents operating on the digital marketplace should be liable to pay the DST.

Should the National Assembly adopt the amendments proposed by the exchequer under the Finance Bill 2021, all locally owned businesses will not be under obligation to pay DST from January 1, 2022.


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The waiver is expected to end cases of double taxation and ease the cost of doing business within the country.

“This is a relief for online platforms which accrue and derive income within the Kenyan legal entity as this allows such entities to only pay corporate income tax when they are profitable,” stated PricewaterhouseCoopers.

Some experts believe the government regulation is chocking the growth of small and medium business enterprises (SMEs) in the country and the abolition of the tax for locals will support their growth.

“The removal of DST will go a long way in supporting entrepreneurs in the digital space to go through the removal of barriers that impede growth, cognizant that taxes and legislation are key barriers to the growth of small businesses in Kenya,” said Viffa CEO Victor Agolla.

Digital Service Tax is 1.5 per cent of the gross transaction value tax, payable on income derived or accrued in Kenya from services offered through a digital marketplace.

The Kenyan Government introduced the Digital Service Tax (DST) effective January 1, 2021 under the Finance Act 2020.