Taxi hailing firm Uber has asked the government to offer clarity on what entails a digital market place to avert costly litigation resulting from conflicting interpretations.
The government has, through the Finance Bill 2019, introduced a new provision that now lists income accruing through a digital marketplace as income chargeable to tax in Kenya.
Uber told Parliament that while it was not opposed to taxation the clarity was vital to avoid confusion.
In the meantime, the US firm is proposing that Parliament inserts a conditional clause - in the amendments to the Income Tax Act - to compel operators toadhere to regulations prescribed by the Treasury Cabinet Secretary.
“That will then allow those in the industries who are in this digital market place to link up with Treasury and the Kenya Revenue Authority to get the right definitions in place for us to deal with this,” said Uber legal advisor Nikhil Hira.
Mr Hira, who is a director at law firm Bowmans, said Kenya can draw lessons on legislation governing online transactions from India, Singapore and Malaysia which already have tax measures in place.
Treasury’s move is targeted at grabbing a slice of the billions of shillings changing hands each year on the increasingly popular online space.
Among large global firms to be affected include Facebook, Uber, Google and Amazon. Locally, online marketplaces where vendors advertise and sell goods to Kenyan consumers will also be targeted.
In its submissions to Parliament on the bill, Google had earlier warned that Kenya risks trade wars with other countries if it imposes tax on digital transactions.
The multinational told MPs that the amendments are contrary to the international tax system that requires companies to pay the bulk of their corporate tax in the countries where their products and services are created as opposed to where they are consumed.