INTRODUCTION OF NEW TAXES, ONLINE SECURITY AND MORE – by Farheen Khandwalla

INTRODUCTION OF NEW TAXES, ONLINE SECURITY AND MORE – by Farheen Khandwalla

INTRODUCTION OF NEW TAXES, ONLINE SECURITY AND MORE

by Farheen Khandwalla

Who would have thought that come 2020, stylish masks will be haute couture and we would actually hand over our phones to our children sans passwords and security features just so that they would learn for all those hours in a day?

Who would have thought hugging and kissing our loved ones would bring them harm instead of comfort?

Staying at home for Eid and Diwali? No huge weddings, small quiet funerals? Are you serious!!!!

2020 draws to an end and boy oh boy, has it not turned our lives topsy turvy!!! And what 2021 holds, only God knows!

Ignorance unfortunately is no longer Bliss!

So much has changed and the changes are here to stay. Do you really think we will be able to go back to our traditional classrooms,” do not carry your phones to school era?” Now that online learning has opened up a host of new ways of learning.

Businesses too, have moved online and yes, all our wonderful mom bosses have embraced the digital marketplace with all the zeal and fervor, but, hang on a second…. The taxman has been eyeing the pie and is coming to claim his slice!

Let me begin by highlighting the 2 taxes, effective from 1st January 2021 that will have an impact on Small and Medium enterprises.

MINIMUM TAX

What is Minimum Tax?

Minimum tax is a base income tax that is payable by all persons conducting a business regardless of making a profit or a loss.

What is the Rate of Minimum tax?

It is 1% of the gross sales or turnover of the company. So, for example, your total sales or turnover before you remove your expenses is 100,000.00, you pay 1% of 100,000 which is 1,000.00 to the KRA.

What is the effective date of Minimum tax?

Minimum tax comes into effect from 01/01/2021.

When is it due for filing and paying of tax?

The tax shall be payable in installments and due on the 20th day of each period falling on the 4th, 6th, 9th and 12th month of the year of income.

Is installment tax still applicable and payable?

Yes, where the installment tax payable by a person is higher than the minimum tax, then the person shall pay installment tax.

However, where the minimum tax is higher than the Installment tax, then the minimum tax will be payable.

What Incomes are exempted from minimum tax?

  • Income exempted by the act.
  • Employment income
  • Income subjected to rental income tax
  • Income that is subject to turnover tax.
  • Income subject to capital gains tax.
  • Income from the extractive/mining industry.

What Is the benefit of paying the minimum tax?

It will serve as an equal playing field for all the taxpayers, basically to broaden the income tax base.

DIGITAL SERVICE TAX(DST)

What is Digital Tax:

Tax payable on income derived or accrued in Kenya from services offered through a digital marketplace.

Digital Marketplace is a platform that enables direct interaction between buyers and sellers of goods and services through electronic means.

When is DST effective?

Digital Service tax comes into effect from 01/01/2021.

What is the rate of DST?

DST is 1.5% of the Gross transaction value.

What is the due date for DST?

DST is due at the time of the transfer of payment for the service to the service provider.

Is DST a final tax?

For residents and companies with a permanent establishment in Kenya, the DST will be an advance tax that they will offset against the income taxes due in the course of the financial year.

For non-residents and companies without a permanent establishment in the country, the DST will be the final tax.

How will KRA collect the DST?

The tax will be collected and remitted by agents appointed by the commissioner of Domestic taxes.

For overseas companies operating on a digital market space that do not have physical offices in Kenya, such companies will be required to appoint local tax representatives who will account for and remit the tax on their behalf.

Benefits of Digital Sales Tax

Collection of DST aims to

  • Address the changing business models and
  • Expand the tax base and ensure equity, fairness and neutrality in taxation between traditional methods of doing business and new ways of transacting over digital platforms.

2021 is most likely going to be a COVID year as well as there is no sign of the end of the pandemic, yes Vaccines are there but the world has a long way to go in terms to recovering from the havoc this pandemic has wrought.

Looking at the Education Landscape…..the abrupt shift from traditional classroom learning to the online learning has caught all the stakeholders in the system unawares, what was to be a stop Gap to the uncertainty surrounding the future of physical schools ais now touted to be the new norm and is here to stay.

As a parent, and I am sure my fellow mom bosses will agree, the shift from physical to online learning has literally caught us off guard as most of us are still grappling with the idea of having our precious bundles spending hours online with access to google and YouTube and the host of other apps with minimal or no supervision.

Let’s be realistic here, how many of us can actually sit through entire online classroom sessions monitoring and policing our children?

As a working mother, how do I know what my child does online once I get to work?

The content available online can be on anything and everything from current global updates on social and political issues to pornography to challenges and mind games with groomers lurking around trying to mislead the young minds, to the radical religious groups seeking to recruit the youth online to abusive and explicit sexual content corroding the morals of our youth.

The problem is huge and if not addressed in the appropriate manner can get out of hand and the outcome will be gruesome to say in the least with possible cases of suicides, depression, and adverse behavioral issues in our young ones.

We urgently need to look into how we can educate ourselves and our children about what is safe and what is not in regards to online safety.

The mantra here is Online safety is as easy as ABC…. ALWAYS BE CAREFUL……

As part of the INNOVUS GROUP initiative to tackle the information gap on online safety to parents, educators and children, we bring you PROJECT LINDA.

Linda is the Swahili term PROTECT and it stands for;

L– Let’s be Vigilant.

I– Initiate dialogue for those exposed to online threats.

N-No to cyberbullying.

D-Do not post personal information online

A-Act now, before it’s too late.

L – Let’s be vigilant-

I cannot stress this enough. A once bubbly, carefree child is now withdrawn and prefers to be left alone. Sudden outbursts of anger and violence. Secretive behavior especially with gadgets in hand….so much more. As parents, we need to constantly be on the lookout for such abnormal behavior in our children. We need to educate our children on the content available in cyberspace and what is okay and what is not.

Keep a check on the sites browsed and be extra careful with who the children are interacting online.

I – Initiate dialogue with those affected by online threats.

As a parent, if you find out that your child has been a victim to any one of the online threat, be it cyberbullying, or addiction to pornography, or exploitation by any online groomer (A groomer is a person who tries to get friendly to children and can possibly lead them to harm once the child gets to trust him). In such instances, it is always better to keep the communication channels open with our children, talk to them and help them out of the situation gently and calmly.

N – No to Cyberbullying.

This is a two-way traffic. We need to instill discipline in our children. They need to know that using depredatory language or terms to their online peers/classmates is unacceptable and unfair.

We also need to educate them on how to deal with online bullys and not let it affect them mentally. It is extremely easy to hide behind pseudo-identity and abuse, ridicule or body shame a class fellow and considering how sensitive teenagers can be, this can lead to very many unpleasant consequences.

Side chatting during online classes, ridiculing a teacher, mocking another student is rampant in these online forums and it is equally important to educate the educators as well on the steps to take when faced with such challenges.

D – Do not post personal information online:

The first rule that we need to drill into our children is NO POSTING OR GIVING OUT PERSONAL INFORMATION ONLINE. You need to guard your personal information as if it were your life savings…it could save your life literally. So many predators out there looking for money and so many opportunities available online to exploit the innocents. We need to be extra careful of the platforms we use online, unwittingly you may be giving out sensitive information that can cost you a pretty penny or even a loved one. Even photographs of our successes can lead to misfortunes knocking on our doors.

A – Act now before it’s too late.

Yes, as mothers we were dragged kicking and screaming online, most of us would never dream of handing out phones and tablets to our children. I for one am looking forward to the day my precious ones don their uniforms and get back to school, but as I said, Online learning is here to stay like it or not. It’s never to late to equip ourselves and our children on online threats and how to overcome them to make e-learning a positive and a safe experience.

Every new day dawns with new challenges and new blessings. Every challenge can be overcome and every blessing is welcome. To accept and to adapt to the moving times has been the only way in which we have survived so far, COVID or no COVID, taxes need to be paid and children need to grow and prosper and move on, as a wise man once said time and tide waits for no one.

Article written by:

Farheen Khandwalla CPA ( ACCA)
BPO Manager- Innovus Group
FB: https://www.facebook.com/InnovusGroup
E: farheen.khandwalla@innovus.co.ke
OR info@innovus.co.ke
T: +254 702 812812 / +254 732 812812
P.o.box 99828-80107
Head office-8th floor, Imaara plaza, Dedan Kimathi Ave, Mombasa
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