The Kenyan government is trying to explore various ways to increase its tax collections. Over the last two years, there have been many changes to the tax laws in the form of Acts of Parliament. Some of these changes and developments, most of them in the form of amendments to the Finance Act, have seen Kenyans digging deep into their pockets to meet their tax obligations. It should be noted that some of the applications focused on extracting money from online/digital services have been very profitable for the businesses that run them.
For example, the government introduced the digital services tax, DST, which means the gross transaction value of digital services is subject to a 1.5 percent digital tax. It came into force in January 2021 and will be paid by people who earn money from offering services and products from the digital market. The government did not stop there: according to the Budget Law, of 2022, the rate of digital services tax increased from 1.5 percent to 3 percent.
Earlier, an amendment to the same law proposed a 10 percent additional tax on the import of phones. There is an additional tax of KES 50 per imported SIM card.
In addition, Meta, the parent company of Facebook, Meta, Instagram, Messenger, and Oculus, has issued a notice to its Kenyan users on Facebook that starting this month (November 2022), they will be subject to VAT on at the local tax rate. advertising. In the Kenyan context, this is a 16 percent VAT on top of what advertisers pay for their ads on social media.
“From November 2022, Meta ads in Kenya are subject to value-added tax (VAT) at the applicable local rate. This applies to all advertisers who their ‘Buy To’ country based on their business or personal address set in Kenya,” Meta said in a statement.
First, you need to enter your VAT ID in the payment settings of your page.
If you are registered for VAT and provide your VAT ID, your VAT ID will appear on your invoice.
Meta explains if you are entitled to a VAT refund, this will help you reclaim the VAT you have paid to the Kenyan tax authorities if you are a VAT registered business in Kenya.
In addition, VAT is added every time you are charged for your ads whether you are buying Meta Ads for business or personal purposes.
“Because VAT is added on top of the fees, you will not only reach your credit threshold faster, but you may end up paying more than your credit threshold,” Meta explained.
Meta will determine that, if you pay for advertising with the manual receipt method, VAT will be calculated and applied at the applicable local rate when your advertising account is received to determine the total available balance. he.