Open AccessTaxing a Digital Economy: Exploring Intangible Assets to Broaden Revenue Base in Kenya
Author(s) -
Justice Gatuyu
Publication year - 2019
Publication title -
the strathmore law review
Language(s) - English
Resource type - Journals
eISSN - 2415-5349
pISSN - 2414-8164
DOI - 10.52907/slr.v4i1.112
Subject(s) - intangible good , revenue , business , business operations , digital economy , valuation (finance) , intangible asset , tax revenue , order (exchange) , globalization , commerce , profit (economics) , base erosion and profit shifting , market economy , economy , economics , finance , double taxation , tax avoidance , public economics , marketing , world wide web , computer science , microeconomics
The world economy has shifted from brick and mortar industries to a knowledge and service economy. In the age of digital evolution, intangible assets have become the new drivers of corporate profit and restructured business models of leading firms. Creators of these assets look forward to monetising and making gains from them. Equally, governments expect to extract revenues by way of taxation. As cross-border trade broadens with the rise of globalisation, intangible assets have increasingly become an area of concern in relation to tax avoidance schemes especially by global firms. In Kenya, appreciation of intangible assets has been rising. This study surveys the prospects of expanding Kenya’s revenue base by tapping intangible assets. The digital economy in Kenya is generally inadequately regulated. This leaves tax loopholes which this study explores in order to identify where revenue can be imposed. In order to make recommendations, the study equally focuses on accounting, valuation, and transfer pricing of intangible assets for tax purposes. To this extent, numerous reforms are necessary to ensure that the taxation of intangibles is optimal and does not distort the rise of a digital economy.