The Kenya Revenue Authority (KRA) on Monday notified social media influencers that they will be liable to pay Digital Service Tax (DST) since their income is accrued from provision of services in the digital marketplace.
KRA further noted that DST has been effective since January 1, 2020, and all influencers must adhere to the set guidelines.
This begs the question, who is a social media influencer?
A social media influencer refers to an influential person who has established credibility in a specific field, has access to a huge audience, and can drive engagement, set trends, and promote brands/services.
Digital Market Place
This is a platform that enables direct interaction between buyers and sellers of goods and services through electronic means.
It is important to note that apart from the ordinary tax regimes, DST and VAT on digital supplies apply to the digital space.
Rate of DST
According to KRA, the rate of DST is 1.5% of the gross transaction value:
- a) In the case of the provision of digital services, the payment received as consideration for the services; and
- b) In the case of a digital marketplace, the commission or fee paid to the digital marketplace provider for the use of the platform
The DST will also be applicable for both Business to Business (B2B) transactions and Business to Consumer (B2C) engagements.
The return and payment with respect to DST is due on or before the 20th day following the end of the month the digital service was offered.
It is important to note that DST is only applicable to digital services, therefore, those who sell their goods online are exempted although the suppliers are required to declare income earned under the self-assessment regime provided under the relevant Tax Laws.
If individuals or companies use your website to sell products, you will also be liable to DST since you will have enabled interactions between buyers and sellers through a digital marketplace.
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