This archive report was first published on 20 July 2021.
Kenya's Finance Act, 2019, introduced a 16 per cent Value Added Tax (VAT) on electronic services, which has led to Zoom increasing its service charges for Kenyan customers.
As of next month, Kenyans will pay at least Ksh2,500 ($25) more for the cheapest Zoom package and at least Ksh4,100 ($41) more for the highest priced package.
However, individuals and firms registered for VAT will be exempted from paying the tax, as they are mandated by the Kenya Revenue Authority (KRA) to register for VAT if they supply or expect to supply taxable goods and services worth at least Ksh5 million ($50,000) in a year.
“Zoom is registered for VAT in Kenya as a non-resident supplier of electronic services. As such, Zoom is required to collect and remit VAT on supplies made to non-VAT registered customers in Kenya,” the company said in an update.
The VAT tax on digital supplies was further guided by the Value Added Tax (Digital Marketplace Supply) Regulations, 2020, which were gazetted in October last year and gave firms a six-month transitional clause to comply with the rules.
Payment of the Digital Services Tax (DST), which is charged at 1.5 per cent of the gross value of a transaction, came into force on January 1, but the Finance Act, 2021, has spared residents from paying the tax, which means only foreign entities that do not have a permanent establishment in the country will continue paying the tax beyond January 1 next year.
