New definition of "royalty" to include payments obtained as consideration for the right to use software.
Proposal:
The Bill proposes to introduce an expanded definition to the term "royalty". The Bill defines it to now include payments received as consideration for the right to use any software, proprietary or off-the-shelf, whether in the form of license, development, training, maintenance or support fees.
Implications:
The proposed definition seeks to classify all software-related payments as "royalties" and subject them to WHT. Currently, certain software-related payments, such as license payments made to software providers through distribution and end-user licence agreements, are not subject to WHT in Kenya, on the principle that they do not confer any intellectual property (IP) rights in the software to the payers. This practice, though contested by the Kenya Revenue Authority (KRA), is in line with the High Court's recent judgement in Seven Seas Technologies Limited v Commissioner of Domestic Taxes, Income Tax Appeal No. 8 of 2017, as well as international best practices. If adopted into law, this proposal will signal a shift from international best practices in the taxation of software payments, as captured under Article 12 of the OECD Model Tax Convention, which generally requires that such payments should only be subject to WHT if they are made as consideration for rights to the software's underlying IP rights.
We note that the proposal would also go against the practice in the region, with both Uganda and Tanzania lacking software in their respective tax laws' definition of "royalty".
Proposed effective date: 1 July 2024
On Mon, May 20, 2024 at 5:13 PM Cherie Oyier via KICTANet <kictanet@lists.kictanet.or.ke> wrote:
>
> The proposal to exclude processing activities relating to assessment, enforcement, and allocation of tax or duty from the provisions of the DPA, will give the taxman unfettered access to personal data stored in data subjects devices for instance. There are no guardrails to establish the parameters of the collection and processing of personal data for these purposes. There is a likelihood that tax officials may have access to non-tax-related personal data in the course of their activities hence further compromising data subjects' rights to privacy.
>
> I believe that even in the event of suspicion of offences such as tax evasion, there are already established procedures under sections 118 and 121 Criminal Procedure Code and section 89 Evidence Act on obtaining search warrants from courts before conducting searches. Such procedures are necessary to avoid abuse of powers and to uphold the right to privacy guaranteed under Article 31 of the Constitution 2010.
>
> Best,
> Cherie
>
> On Mon, May 20, 2024 at 2:49 PM Linda Wairure via KICTANet <kictanet@lists.kictanet.or.ke> wrote:
>>
>> Indeed!!! Thank you Nicodemus for the insights...Do you have an alternative proposal to these ammendments?
>>
>> On Mon, 20 May 2024, 14:23 Nicodemus Makau via KICTANet, <kictanet@lists.kictanet.or.ke> wrote:
>>>
>>> As for the amendment i do not support when it comes to one's privacy and taxation.
>>>
>>> On Mon, May 20, 2024, 12:44 PM Alex Watila via KICTANet <kictanet@lists.kictanet.or.ke> wrote:
>>>>
>>>> Good afternoon Listers,
>>>> When I heard of the amendment I wondered if it could stand the test of time.
>>>>
>>>> This is because the data protection act was enacted to operationalize (give life) to a constitutional right of privacy
>>>>
>>>> without amending the constitution, i think the amendment to the data protection act will be inconsistent with the constitution
>>>>
>>>> Regards,
>>>>
>>>> On Mon, May 20, 2024 at 11:12 AM Linda Wairure via KICTANet <kictanet@lists.kictanet.or.ke> wrote:
>>>>>
>>>>> Dear Listers,
>>>>>
>>>>> Greetings from KICTANet!
>>>>>
>>>>> Today marks the beginning of our three-day moderated online discussion and public participation on the Finance Bill, 2024. As a key stakeholder in the ICT sector, your insights are invaluable as we navigate crucial proposals related to revenue-raising measures.
>>>>>
>>>>> PROPOSAL: The Data Protection Act
>>>>>
>>>>> The Bill seeks to amend section 51 of the Data Protection Act (Cap. 411C) to provide for the exemption of the processing of personal data that relates to the assessment, enforcement or collection of any tax or duty from the provisions of the Data Protection Act.
>>>>>
>>>>> This proposed amendment will give KRA unfettered access to citizens’ personal data that extend beyond financial data.
>>>>>
>>>>> Question:
>>>>>
>>>>> What implications might the proposed amendment to exempt the processing of personal data related to tax or duty assessment, enforcement, or collection from the Data Protection Act have on individuals' privacy rights and the overall effectiveness of data protection measures in the context of taxation?
>>>>>
>>>>> 2. What would you propose?
>>>>>
>>>>> We look forward to your active participation in shaping policies that support a thriving ICT ecosystem.
>>>>>
>>>>> Should you have any questions or require further information, please do not hesitate to reach out to lgichohi@kictanet.or.ke . We are eager to hear your thoughts and insights on this crucial matter.
>>>>>
>>>>>
>>>>>
>>>>> Sincerely,
>>>>>
>>>>> Linda Gichohi.
>>>>>
>>>>> Kenya ICT Action Network
>>>>>
>>>>> Top of Form
>>>>>
>>>>>
>>>>>
>>>>>
>>>>> On Fri, 17 May 2024 at 11:04, Chepkoech Towett via KICTANet <kictanet@lists.kictanet.or.ke> wrote:
>>>>>>
>>>>>> Greetings,
>>>>>> Looking forward to the engagement.
>>>>>>
>>>>>> Regards,
>>>>>> Chepkoech Towett.
>>>>>>
>>>>>> On Fri, 17 May 2024, 10:48 Linda Wairure via KICTANet, <kictanet@lists.kictanet.or.ke> wrote:
>>>>>>>
>>>>>>> Dear Listers,
>>>>>>>
>>>>>>> Greetings from KICTANet!
>>>>>>>
>>>>>>> As a leading advocate for ICT policy and regulation, KICTANet is dedicated to fostering collaboration and promoting an enabling environment in the ICT sector. With our strategic objectives focused on effective multi-stakeholder participation, we are committed to engaging with stakeholders like you to ensure robust, rights-based policies.
>>>>>>>
>>>>>>> We are reaching out to invite you to participate in the three-day moderated online mailing list discussion regarding the Finance Bill, 2024 (National Assembly Bills No. 30 of 2024). This bill contains crucial proposals related to revenue-raising measures, including the digital service tax, liability and collection of taxes. Your insights and contributions are vital as we navigate these proposals and their potential impact on the ICT sector.
>>>>>>>
>>>>>>> The discussion will take place on the KICTANet mailing list from Monday, May 20th to Wednesday, May 22nd . Each day of the discussion will focus on specific aspects of the Finance Bill, 2024, allowing us to delve into its provisions and implications.
>>>>>>>
>>>>>>> We encourage you to review the Finance Bill, 2024 link attached and the template format of submission of the memorandum. We shall include a matrix presentation outlining our concerns and proposals regarding relevant provisions of the Finance Bill, 2024. Your feedback and perspectives are invaluable as we work towards promoting policies that support a thriving ICT ecosystem.
>>>>>>>
>>>>>>> http://www.parliament.go.ke/sites/default/files/2024-05/Finance%20Bill%2C%202024.pdf
>>>>>>>
>>>>>>> Should you have any questions or require further information, please do not hesitate to reach out to lgichohi@kictanet.or.ke . We are eager to hear your thoughts and insights on this crucial matter.
>>>>>>>
>>>>>>> Thank you for your continued support and participation. We look forward to engaging with you in this discussion.
>>>>>>>
>>>>>>> Sincerely,
>>>>>>>
>>>>>>> Linda Gichohi.
>>>>>>>
>>>>>>> Kenya ICT Action Network.
>>>>>>>
>>>>>>>
>>>>>>>
>>>>>>>
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>>>>>>
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>>>>>>
>>>>>> KICTANet is a multi-stakeholder Think Tank for people and institutions interested and involved in ICT policy and regulation.
>>>>>> KICTANet is a catalyst for reform in the Information and Communication Technology sector. Its work is guided by four pillars
>>>>>> of Policy Advocacy, Capacity Building, Research, and Stakeholder Engagement.
>>>>>>
>>>>>> KICTANetiquette : Adhere to the same standards of acceptable behaviors online that you follow in real life: respect people's
>>>>>> times and bandwidth, share knowledge, don't flame or abuse or personalize, respect privacy, do not spam, do not market your
>>>>>> wares or qualifications.
>>>>>>
>>>>>> PRIVACY POLICY: See https://mm3-lists.kictanet.or.ke/mm/lists/kictanet.lists.kictanet.or.ke/
>>>>>>
>>>>>> KICTANet - The Power of Communities, is Kenya's premier ICT policy engagement platform.
>>>>>
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>>>>>
>>>>> KICTANet is a multi-stakeholder Think Tank for people and institutions interested and involved in ICT policy and regulation.
>>>>> KICTANet is a catalyst for reform in the Information and Communication Technology sector. Its work is guided by four pillars
>>>>> of Policy Advocacy, Capacity Building, Research, and Stakeholder Engagement.
>>>>>
>>>>> KICTANetiquette : Adhere to the same standards of acceptable behaviors online that you follow in real life: respect people's
>>>>> times and bandwidth, share knowledge, don't flame or abuse or personalize, respect privacy, do not spam, do not market your
>>>>> wares or qualifications.
>>>>>
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>>>>>
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>>>>
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>>>> WhatsApp Channel: https://whatsapp.com/channel/0029VaQsX4w6mYPIctLsGh1K
>>>>
>>>> KICTANet is a multi-stakeholder Think Tank for people and institutions interested and involved in ICT policy and regulation.
>>>> KICTANet is a catalyst for reform in the Information and Communication Technology sector. Its work is guided by four pillars
>>>> of Policy Advocacy, Capacity Building, Research, and Stakeholder Engagement.
>>>>
>>>> KICTANetiquette : Adhere to the same standards of acceptable behaviors online that you follow in real life: respect people's
>>>> times and bandwidth, share knowledge, don't flame or abuse or personalize, respect privacy, do not spam, do not market your
>>>> wares or qualifications.
>>>>
>>>> PRIVACY POLICY: See https://mm3-lists.kictanet.or.ke/mm/lists/kictanet.lists.kictanet.or.ke/
>>>>
>>>> KICTANet - The Power of Communities, is Kenya's premier ICT policy engagement platform.
>>>
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>>>
>>> KICTANet is a multi-stakeholder Think Tank for people and institutions interested and involved in ICT policy and regulation.
>>> KICTANet is a catalyst for reform in the Information and Communication Technology sector. Its work is guided by four pillars
>>> of Policy Advocacy, Capacity Building, Research, and Stakeholder Engagement.
>>>
>>> KICTANetiquette : Adhere to the same standards of acceptable behaviors online that you follow in real life: respect people's
>>> times and bandwidth, share knowledge, don't flame or abuse or personalize, respect privacy, do not spam, do not market your
>>> wares or qualifications.
>>>
>>> PRIVACY POLICY: See https://mm3-lists.kictanet.or.ke/mm/lists/kictanet.lists.kictanet.or.ke/
>>>
>>> KICTANet - The Power of Communities, is Kenya's premier ICT policy engagement platform.
>>
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>> WhatsApp Channel: https://whatsapp.com/channel/0029VaQsX4w6mYPIctLsGh1K
>>
>> KICTANet is a multi-stakeholder Think Tank for people and institutions interested and involved in ICT policy and regulation.
>> KICTANet is a catalyst for reform in the Information and Communication Technology sector. Its work is guided by four pillars
>> of Policy Advocacy, Capacity Building, Research, and Stakeholder Engagement.
>>
>> KICTANetiquette : Adhere to the same standards of acceptable behaviors online that you follow in real life: respect people's
>> times and bandwidth, share knowledge, don't flame or abuse or personalize, respect privacy, do not spam, do not market your
>> wares or qualifications.
>>
>> PRIVACY POLICY: See https://mm3-lists.kictanet.or.ke/mm/lists/kictanet.lists.kictanet.or.ke/
>>
>> KICTANet - The Power of Communities, is Kenya's premier ICT policy engagement platform.
>
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>
> KICTANet is a multi-stakeholder Think Tank for people and institutions interested and involved in ICT policy and regulation.
> KICTANet is a catalyst for reform in the Information and Communication Technology sector. Its work is guided by four pillars
> of Policy Advocacy, Capacity Building, Research, and Stakeholder Engagement.
>
> KICTANetiquette : Adhere to the same standards of acceptable behaviors online that you follow in real life: respect people's
> times and bandwidth, share knowledge, don't flame or abuse or personalize, respect privacy, do not spam, do not market your
> wares or qualifications.
>
> PRIVACY POLICY: See https://mm3-lists.kictanet.or.ke/mm/lists/kictanet.lists.kictanet.or.ke/
>
> KICTANet - The Power of Communities, is Kenya's premier ICT policy engagement platform.
--
Kind Regards,
Steve Muchai