For VAT reasons, a digital marketplace is only allowed to offer goods and services. A digital marketplace previously covered the sale of other property. Additionally, services delivered through a digital marketplace shall not be treated as imported services. Reverse VAT would therefore not be applicable to these services.
Additionally, the KES 5 million VAT registration requirement is no longer applicable to providers of imported digital services who provide them via the internet.
Value added tax (“VAT”) at eight percent (8%) will be applicable to liquefied petroleum gas (“LPG”), which incorporates propane.
The documentation that an oil marketing company (“OMC”) must submit in order to submit an input VAT claim for petroleum products imported through the Open Tender System are currently specified in the Finance Act of 2022. These consist of: a unique entry containing the tender winner’s name and KRA personal identification number (“PIN”) and the other OMCs taking part in the tender by name.
The Finance Act of 2022 additionally penalizes and charges interest and penalties for failing to declare items to a customs official in accordance with the Tax Procedures Act of 2015 (“TPA”). Additionally, it caps the amount of interest that can be paid at the principal tax.
A tax known as the “Digital Service Tax” (or “DST”) is levied on income earned in Kenya by non-residents who provide services through the internet. Since resident tax payers are not subject to DST, non-resident entities with a permanent establishment in Kenya will no longer be charged DST. The plan to raise the DST rate from its current one and a half percent (1.5%) to three percent (3%) was defeated, therefore the old rate will remain in effect.
Donations (in whatever form) to non-profits whose revenue is tax-exempt as well as donations to initiatives endorsed by the cabinet secretary in charge of financial matters are now permitted as deductions in determining a person’s taxable income. In the past, only monetary contributions to non-profit NGO’s and societies were permitted as deductions in determining taxable income.
Previously, telecommunications providers could only deduct a maximum of 5% of the annual expenditures associated with purchasing the license to use a fibre optic cable. Due to the removal of this clause, telecommunications companies are no longer allowed to deduct costs associated with purchasing usage rights to fibre optic cables.