Challenges faced by the current Kenyan tax law in dealing with electronic commerce
Date
2018
Authors
Sigadah, Mariciana Nekesa
Journal Title
Journal ISSN
Volume Title
Publisher
Strathmore University
Abstract
The internet has greatly revolutionized the traditional physical modes of conducting business to the current use of electronic devices either partially or wholly to conduct businesses. Many sectors of the Kenyan economy are now being run using electronic medium. This change in the mode of transacting has led to a shift of the base of income from the traditional markets to that from electronic commerce. This paper is aimed at achieving fairness of sharing the burden of taxation as provided in article 201 of the Constitution of Kenya. Income from electronic commerce however, in • some cases ends up untaxed due to the nature of the digital commerce. Electronic commerce challenges the traditional principles for basing taxation. E-commerce poses challenges such as anonymity and defying of geographical boundaries which then makes the income earned from e-commerce inapplicable to tax laws and therefore making e-commerce income earners not to participate in sharing the burden of taxation. Taxation of income from e-commerce requires laws that are made in contemplation of its nature. The traditional principles for basing taxation require physical presence in a state for such a state to assert tax rights over a person. E-commerce on the other hand is vi11ual and makes it possible for one to earn income from a pm1icular state without having physical presence in that state. Such aspects of ecommerce need to be contemplated by the law for income from e-commerce to be applicable to tax laws. A number of countries mostly being developed and experiencing the same challenges have made advancements towards addressing these issues. Regional and International organizations have also been formed to address the same issues. This research borrows greatly from the Organization for Economic Cooperation and Development and two countries India and South Africa used as comparative case studies on how to address the challenges e-commerce poses to taxation.
Description
Submitted in partial fulfillment of the requirements of the Bachelor of Laws Degree, Strathmore University Law School
Keywords
Kenyan tax law, Electronic commerce, Electronic devices