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Facebook to charge VAT on ads in Kenya

Facebook is to start applying VAT on advertisements in Kenya. However, the charges only apply to advertisers that do not confirm they are advertising for business. 

“Due to implementation of a value-added tax (VAT) in Kenya, Facebook is required to charge VAT on the sale of ads to advertisers that are not advertising for business purposes in Kenya,” Facebook said.

When will Facebook charge VAT on adverts?

Advertisers are able to select an option through Facebook Ads Manager that confirms they are advertising for business purposes. In such cases, the business would be liable for managing their own VAT as per Kenyan tax regulations. 

The charges are in line with Kenya’s VAT (Digital Market Place Supply) Regulations, 2020, which take effect on 1 April 2021.

Kenya’s Digital Services Tax

Kenya also recently established a Digital Services Tax, covering a wide array of digital services. Kenya’s DST is set at 1.5% of the gross transaction value of services provided.

Digital services providers that operate in Kenya should therefore review their processes to ensure they remain compliant.

VAT on streaming services in Zimbabwe

Countries around the African continent are taking measures to collect tax revenue on digital services. 

In Zimbabwe, sharp-eyed Zimbabwe tech journalists noticed that local receipts on Streaming service Spotify include VAT charges. 

Zimbabwe’s government has, furthermore, indicated its intention to collect revenue on digital services provided by overseas businesses. Thus, streaming services and other providers of digital services to the Zimbabwean market should assess whether they are VAT compliant. 

The meaning of digital service in South Africa 

In 2020, South Africa broadened its definition of ‘digital service’ according to local Digital Services VAT rules. 

Digital Services VAT in South Africa covers online advertising, gaming and training. The regulations also cover software subscriptions, streaming media and other services.

Are you ready for Digital Services VAT?  

Digital services have become central to the global economy and are an important source of potential tax revenue. A steadily increasing number of countries are therefore adopting Digital Services VAT. 

Get in touch with Vatglobal for full clarity on all your VAT obligations. In addition, we’ll ensure your business is always 100% VAT compliance, everywhere you do business.

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