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Digital Services Tax - Tax Alert

Digital Services Tax - Tax Alert

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Background

In 2019, the Government through the Finance Act, 2019 amended the Income Tax Act (ITA) to introduce a Digital Services Tax (DST) regime to tax certain supplies made through a digital marketplace. The ITA defines a digital marketplace as “a platform that enables direct interaction between buyers and sellers of goods and services through electronic means.”

Regulations on the Digital Marketplace

In August 2020, the Cabinet Secretary, National Treasury issued draft DST Regulations, 2020 (the draft Regulations) to guide the implementation of DST. DST is expected to take effect on 1 January 2021 after publication of the final regulations.

The DST rate is 1.5% of the gross transaction value. The gross transaction value is the payment received as consideration for the digital service. In the context of a digital marketplace provider, it is the

 

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