Social media giant, Facebook, has introduced taxes in Kenya effective April 1, 2021.
The taxes will be applicable to advertisers whose ‘Sold To’ country on their business or personal address is set to Kenya and who haven’t confirmed that they are advertising for business purposes.
“Beginning 1 April 2021, Facebook ads in Kenya are subject to a value added tax (VAT) at the applicable local tax rate,” said Facebook on its business page.
Facebook said not every Facebook account holder would be liable to tax deduction but only those who meet the criteria.
In the Ad Accounts Settings of Ads Manager, Facebook said, “you can check the box to confirm whether or not you’re advertising for business purposes and responsible for self-assessing and paying VAT in accordance with the Tax Code of Kenya.”
If you confirm you are advertising for business purposes, Facebook said it “doesn’t add VAT to your purchase of Facebook ads.”
On its business page, Facebook said VAT would be added whenever you are charged for your ads if you’re not purchasing Facebook ads for business purposes.
“Because VAT is added on top of charges, you won’t reach your billing threshold faster, but you may be charged more than your billing threshold amount. If you pay for Facebook ads with a manual payment method, VAT is accounted for and applied at the applicable local rate when your ad account is funded to determine the total balance available.”
Digital Service Tax
In 2020, Kenya introduced two types of taxes targeted at the digital economy, namely; Digital Service Tax and Value Added Tax on Digital Marketplace Supply.
National Treasury Cabinet Secretary Ukur Yatani gazetted the Value Added Tax (Digital marketplace supply) Regulations 2020 on September 10, last year.
These Regulations aim at ensuring that VAT is charged on taxable services supplied in Kenya through the digital marketplace by Business to Customer (B2C) transactions.
Kenya’s digital service take became effective on January 2, this year, a move that will see the Kenya Revenue Authority (KRA) widen its revenue bracket.
