Finance Bill 2024: Kenyan E-Commerce Stakeholders Express Concerns Over Introduction of New Tax

 

Individuals  working online

Kenya's e-commerce stakeholders have raised concerns over the introduction of a new tax in the Finance Bill 2024. Kenyans working online. The government will replace the digital service tax.  What did e-commercial stakeholders say? Under the e-Biz Kwa Vijana project implemented by BrighterMonday Kenya, they argued that the Significant Economic Presence (SEP) Tax will significantly impact the profitability and operational costs of e-commerce platforms. . The National Treasury plans to impose a 6% SEP on gross turnover for non-resident firms generating revenues from digital marketplaces. Significant Economic Presence Tax will replace the digital service tax, currently charged at the rate of 1.5%. BrighterMonday chief executive officer (CEO) Chris Otundo said the 20% withholding tax for non-residents and 5% for residents in the e-commerce space might also present compliance challenges for smaller sellers, potentially hindering their participation in marketplaces. “As stakeholders, we call for continuous engagement, knowledge-sharing, and collaboration with government and the relevant departments to address these concerns as the e-commerce ecosystem’s growth shall depend largely on how businesses and particularly young entrepreneurs adapt to this changing tax landscape," Otundo said in a statement seen by TUKO.co.ke. Why Bolt and Uber issued warnings Uber and Bolt representatives also appeared before the National Assembly Committee on Finance and Planning and argued that imposing the tax would lead to the collapse of the taxi industry. Bolt public policy manager George Abasy noted that the implementation of SEP will increase taxes on non-residents to 22%. Abasy argued that imposing the tax would lead to losses or low profit margins. 

by  Japhet Ruto