Same approach, different motives

Unlike Uganda & Tanzania, Kenya’s Digital Taxman Doesn’t Chase Fake News

By  |  January 26, 2021

Kenya’s eye for digital tax revenues is already information at the fingertips.

But the country’s e-taxman has finally gloved up to demand 1.5 percent of the gross transaction value of every transaction, be it an online class, an eBook sale or a movie streaming service.

Called the digital service tax (DST), the East African country’s bid to plug the gaps in its public coffers is now officially operative.

As part of its Finance Act 2020, the tax applies to a wide range of digital services, including commercial mobile applications on Google Play Store like Netflix, Spotify, and YouTube Premium.

Nevertheless, Kenya isn’t the first East African country to join its digital tax dash. Uganda and Tanzania already have frameworks for the same purpose, but with seemingly different reasons.

The goal is to bring online transactions into the tax net, but, unlike the former 2 countries, Kenya’s move appears pro-revenue boost.

In Uganda and Tanzania, the digital tax laws in operation look more inclined to inhibiting the spread of fake news and hate speech.

For example, the Museveni administration introduced a digital service tax in Uganda in May 2018. But a chief aim for the government—whose president has been in power since 1986.

To curb gossip and broaden Uganda’s tax base, internet users in the country have to pay a daily tax of USD 0.05, which is about 200 Ugandan Shillings.

For the Tanzanian replication, curbing hate speech and misinformation led the government to introduce the Electronic and Postal Communications Regulations, 2018. The tax affects bloggers, online radio and TV services, all of which need to pay a annual fee tuning to USD 900—more than 2,000 Tanzanian Shillings.

Under Tanzania’s digital tax rules, online content publishers must pay an annual licensing fee of USD 43, an initial license charge of USD 429 (about 1 million in local currency).

Uganda and Tanzania’s moves to tax digital transactions, unlike Kenya’s, seem more tailored to regulate the kind of content being shared in the nations’ online spaces. In fact, there’s hardly any obvious/upfront fake news-fighting motive attached to this section of the nation’s Finance Act 2020.

Nevertheless, mining the digital well to realize revenues isn’t an entirely new play in Africa, as both South Africa and Nigeria have paved the way to connect digital service providers into their tax economies.

Africa’s digital economy is on the rise, but it has only just started. According to forecasts, the continent’s digital economy is expected to grow to more than USD 300 Bn in value by 2025. Still, the race to fight misinformation alongside is alive and of the essence.

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