TAXMAN FIRES WARNING SHOT

KRA directs online traders to remit VAT

Some online traders have been avoiding passing the VAT charges on to consumers.

In Summary
  • KRA has directed business owners trading on digital platforms to charge Value Added Tax (VAT) on their transitions. 
  • Online retail businesses became the subject of taxation last year, following amendments to the Finance Act.
KRA headquarters at the Times Tower, Nairobi.
KRA headquarters at the Times Tower, Nairobi.
Image: FILE

The Kenya Revenue Authority has directed online businesses to charge value-added tax on their transactions and remit the taxes.

This comes as more Kenyans resort to purchasing goods and services to keep social distance, a situation that has led to a spike in online retail shops in the country.

Some online traders have been avoiding passing the VAT charges on to consumers. But the taxman now says they are obligated under the VAT Act, 2013, to charge and remit the tax.

“We have noted with concern that some digital business owners had failed to charge VAT as required by law,” said Elizabeth Meyo, the commissioner for domestic taxes.

The charges relate to all sales made on digital platforms and commissions charged to vendors for the use of the platforms.

“All noncompliant traders are hereby advised to comply to avoid penalties and interests on outstanding taxes, failing which appropriate action will be taken in accordance with the law. Where fraud will be detected, appropriate criminal proceedings shall be brought against the offenders,” the commissioner said.

Online retail businesses became the subject of taxation last year, following amendments to the Finance Act. The Act sought to clarify that income from digital transactions attracts VAT.

In 2019, KRA organised a training session for all online traders to learn about tax compliance and to get help in declaring taxes.