Countries in Eastern Africa have embraced digital market space and are looking to tax digital services in an attempt to enhance revenue collections, tame excessive borrowing as well as narrow their fiscal deficits.
Rwanda has become the latest in East Africa after Kenya to take up digital service taxation as it looks to expand its tax base.
The taxation is to be reviewed by the Rwanda Revenue Authority (RRA) which is supposed to make an impact assessment before implementing the proposed policy.
This is despite making profits in its tax collection, which exceeded their original target by Ksh.6 million.
“We have not laid out all the details yet but Rwandans who consume these services are using the money generated here. It is also unfair when we tax local digital companies that might not even have as many clients as these companies,” said RRAs deputy commissioner, Jean-Louis Kaliningondo.
The implementation of this tax will lead to social media influencers, as well as Rwandan nationals who also make money through the platforms to be taxed.
Other countries in the community that are chatting path to include digital services in their tax bracket are Tanzania which has already put in place proposals.
Kenya implemented the tax policy in the finance Act 2020, which became effective in January 1, 2021.