DIGITAL SUMMIT

Sakaja faults digital tax, terms it combative

Digital tax will kill creativity - Sakaja

In Summary
  • He has vowed to rally legislators to review the law which he says is limiting innovations at the time joblessness is on rising in the country.
  • The Finance Act 2020 introduced a digital service tax (DST) on income from services provided through the digital marketplace in Kenya.
Nairobi Senator Johnson Sakaja
Nairobi Senator Johnson Sakaja
Image: COURTESY

African governments should not punish digital innovations but instead view them as key enablers to post Covid-19 economic recovery. 

Speaking while opening a two-day inaugural Africa Digital Summit in Nairobi senator Johnson Sakaja termed Kenya's  digital tax  as combative.

He vowed to rally legislators to review the law which he says is limiting innovations at the time joblessness is on the rise in the country.

"The digital innovations especially in the financial sector provide much-needed transaction solutions while creating jobs. Introducing taxes in that area is futile,'' Sakaja said. 

The Finance Act 2020 introduced a digital service tax (DST) on income from services provided through the digital marketplace in Kenya.

The DST is applied at 1.5 per cent on the gross transaction value (exclusive of VAT) and took effect on January 1.

Sakaja said the digital economy is the future of the continent, promising to rally legislators to pass supportive legislation. 

''I take this opportunity to call upon my fellow legislators and decision makers to identify solutions required to steer a meaningful financial course in the continent,'' Sakaja said. 

Last year, he introduced Startup Bill, 2020 Bill to provide a legal framework for startups by facilitating the registration and creating linkages for the startups to access capital from financial institutions and investors.

The proposed law seeks to establish the incubation programmes at both national and county levels.

Further, the Kenya National Innovation Agency working in conjunction with the counties are to put in place a national and county incubation policy framework for development of startups.

Local and international business incubators may enter into partnerships with national and county governments in order to provide for an expansive breeding ground for startups. 

He added that without proper policies,  Africa will not achieve the dream of leveraging digital finance in businesses and everyday transactions for the next 10 years as defined in the Free Trade Agreement. 

''Now more than ever, Africa needs policies that facilitate and harmonize digital transactions across the globe,'' Sakaja said. 

The Africa Digital Summit in Nairobi has attracted participants both physical and virtual in almost 40 countries in the continent.