The Kenya Revenue Authority (KRA) has taken a significant step towards ensuring tax compliance among Kenyan hosts on Airbnb, the popular online marketplace for short and long-term homestays.
The KRA has formally requested transaction data from Airbnb for the period starting January 1, 2021, to December 31, 2022.
This move is part of a broader effort by the KRA to crack down on tax evasion, particularly among those who have been able to avoid paying taxes on income earned through the platform.
Airbnb Ireland UC, which serves as the data controller for the personal data of all users of Airbnb Kenya, has revealed the demand from the tax man.
The disclosures are expected to identify hosts and details of their earnings on the platform.
Airbnb Ireland said in a statement that “KRA has issued an exchange of information request to the Irish Tax Authority-Irish Revenue, seeking certain information on Kenya hosts, and Irish Revenue has formally requested Airbnb to share this information, which we are legally obliged to.”
This action by the KRA underscores the increasing scrutiny faced by digital platforms and their users in terms of tax compliance.
As more economic activity moves online, tax authorities worldwide are seeking ways to ensure that digital platforms, and those who earn income through them, are paying their fair share of taxes.
The KRA’s move is in line with these global trends and reflects the growing importance of digital platforms in Kenya’s economy.
However, this development also raises questions about privacy and data protection.
While the KRA’s request is aimed at ensuring tax compliance, it also involves accessing potentially sensitive personal and financial information. This highlights the need for clear guidelines and safeguards to protect the privacy of Airbnb hosts and users.
The request for transaction data from Airbnb also signifies a shift in the way tax authorities are adapting to the digital economy.
Traditional methods of tax collection may not be effective in the context of online platforms like Airbnb, which operate across borders and involve numerous individual hosts.
This situation calls for innovative approaches to tax collection, such as the exchange of information between tax authorities in different countries.
KRA’s request for transaction data from Airbnb is a significant development in Kenya’s efforts to ensure tax compliance in the digital economy. It reflects the challenges and opportunities presented by digital platforms like Airbnb, and the need for a balanced approach that ensures tax compliance while also protecting privacy and promoting economic growth.
