US technology company, Google has warned that Kenya’s plan to impose tax on digital transactions could spark trade wars with other countries.
Google told Members of Parliament that the State’s bid to introduce amendments to the Finance Bill 2019 to slap online businesses with an income tax contravenes international tax system.
The multinational said the international tax system requires companies to pay their corporate tax in the countries where their products and services are created and not where they are consumed.
Google Kenya representative Michael Murungi told MPs that if the law is passed, it could set Kenya on a collision path with other nations.
“The risk with this is as we see happening in France after its decision to impose a unilateral tax on international firms on digital platforms,” Murungi said.
“France is now in the midst of a trade dispute with the US Treasury because of that tax which was seen as targeting Google and other multinational firms based in the US,” Murungi told House Finance committee during public hearings on the Finance Bill.