Mercy Corps Digital Economy Taxation Consultancy in Kenya

Mercy Corps Digital Economy Taxation Consultancy in Kenya


Purpose of the Engagement

  • This study aims to map out the typical financial flows and tax incidences of gig workers, examine the potential impact of additional tax measures on worker earnings & participation in the gig economy and provide recommendations on best practices for taxing a nascent but promising sector.

  • The study will apply a qualitative approach, a human centered design approach is highly recommended, and will be anchored on worker personas and definitions of a typical gig worker across four categories of online gig workers: blue-collar workers, riders, online merchants and online professional freelancers.

  • For this study, the four categories of online gig workers will be collectively referred to as BROOM (Blue-collar workers, Riders, Online professional freelancers and Online Merchants) to allow ease of reference.

  • This study is targeted at contributing towards the current conversation about taxing the digital economy by providing nuanced insights, backed by evidence, to policymakers and other ecosystem stakeholders.

  • Under the supervision of the Partner Evaluation Analyst, Youth Impact Labs, the consultant will be responsible for executing all aspects related to this study including desk research, data collection, interviews, focus groups, data analysis and the development of the final report.

    The consultant will focus on the following]

    Developing personas for four categories of workers in the gig economy blue-collar workers, riders, online merchants and online professional freelancers.

    The consultant will specifically:

  • Develop unique personas for each of the four worker categories.

  • Develop the persona profiles based on a range of factors, among them, the age of the worker, educational background, motivation for participation in the gig economy, number of gig completed and the number of income streams.

    Mapping out cash inflows and outflows for a typical blue-collar worker, rider, online merchant and online professional freelancer. The consultant will map the inflows for both platform workers (those working on online gig work platforms and digitally-enabled offline platforms) and non-platform workers (those working offline, in the traditional informal economy) in each of the four worker groups.

    The consultant will specifically:

  • Define who is a typical sophisticated and a non-sophisticated gig worker in each of the four worker categories. The definition will, at a bare minimum, capture the age of the worker, educational background, motivation for participation in the gig economy, number of gig completed and the number of income streams. The scope will span both platform and non-platform workers.

  • Define the typical journey for a sophisticated and a non-sophisticated gig worker from customer acquisition to completing a single customer transaction for each of the four worker categories.

  • Lay out the financial flows of a typical gig worker, capturing the revenue, all related expenses and the net earnings of the gig worker in a typical day/month. The scope will span both platform and non-platform workers.

  • Map out all the enablers (platforms) involved in a single typical transaction for by sophisticated and a non-sophisticated blue-collar worker, rider, online merchant and online professional freelancer.

    Providing context on all the applicable taxes to gig workers. The consultant will provide a narrative description of each applicable tax and how it is applied, including what it is applied on, the actual tax rate and the frequency of payment. The consultant will also provide a view of which of the applicable tax rates gig workers often comply with.

    Mapping out all the points of taxation and tax incidence on a typical gig work transaction by a sophisticated and a non-sophisticated gig worker in each of the four worker categories. The consultant will map this out based on all the applicable taxes that were in force pre- and post- the
    enactment of the Finance Act 2019, factoring in the digital marketplace taxes and the re-introduction of turnover tax. The consultant will also complete a similar mapping exercise for the same category of workers working offline, in the traditional informal economy.

  • Analyzing the impact of the newly introduction of digital marketplace taxes and turnover tax on the net earnings of a typical sophisticated and a non-sophisticated gig worker in each of the four worker categories.

    The consultant will specifically:

  • Establish the absolute and percentage change in the net earnings for a typical sophisticated and a non-sophisticated gig worker in each of the four worker categories.

  • Compare the above computed net earnings against earnings made by same category of workers working offline, in the traditional informal economy.

  • Assess the potential impact of the above income disparities in accelerating or decelerating the pace of formalization among informal sector worker

    Developing 2 case studies that highlight successful/unsuccessful tax measures implemented during the nascent stages of promising industries in the digital economy.

    The consultant will specifically focus on:

  • Providing an overview of the country and the state of the target sector/industry where the legislative measure(s) were applied

  • Highlighting the specific tax measure(s) that were introduced by the government to the nascent sector/industry

  • Highlighting the impact of the government’s taxation approach to growing or undermining the growth of the sector

  • Highlighting any subsequent changes in tax legislation to the sector/industry, when they were effected and the impact on the sector/industry

    Recommending best practices for implementation of the new taxes. The consultant will synthesis all the findings and provide a recommendation on the best approach of taxation of online gig workers with a view to ensure that tax measures are not punitive.

  • The consultant/s will employ rigorous methodologies with sufficient rigor to generate actionable insights across the focus areas. This shall include, but is not limited to desk research, interviews with various stakeholders including digital marketplace owners, government and platform & non-platform workers.

  • The consultant/s will deliver a final report that broadly maps out the financial flows of a gig worker and quantified the impact of new tax measures on earning and participation in the online gig economy. Mercy Corps will review a draft copy of the report for feedback for completeness and accuracy of consultancy objectives and results.

  • The report will be no longer than 30 pages excluding annexes.

  • Further, the consultant will co-facilitate a readout pre/post the launch of the study report.

    Consultancy Activities

    The Consultant will:

  • Develop an inception report at the start of the engagement that will include the research methodology and work plan.

  • Conduct secondary research through a rigorous desk review

  • Conduct primary data collection through use of interviews

  • Develop a draft final report for review by the Youth Impact Labs team

  • Facilitate a readout event to present the draft report to selected stakeholders

  • Develop a final report that incorporates recommendations from the Youth Impact Labs team

    Study Timelines

  • The estimated start date for this engagement shall be 30th March 2020 and is expected to be completed by 8th May 2020.

    How to Apply

  • For more information and job application details, see; Mercy Corps Digital Economy Taxation Consultancy in Kenya


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