Kenyans feel the pinch as global tech firms directed to impose VAT
Global tech companies have officially added VAT to orders received from Kenya following new regulations.
According to the Value Added Tax Digital Marketplace Supply Regulations 2020, international companies are required to pay VAT on the product they offer in the Kenyan market.
Over-the-top services including streaming television shows, film, music, podcasts and any other form of digital content will incur charges.
The regulation also includes software, drivers, website filters and firewalls, as well as electronic data management including website hosting, online data warehousing, file-sharing and cloud storage services.
Hosting platform Digital Ocean sent a notice to its Kenyan customers that they will be surcharged 16% VAT on their orders.
The notice states: “To ensure compliance with the requirements of Kenya’s new Value Added Tax (Digital Marketplace Supply) Regulations, 2020 for non-resident companies such as DigitalOcean, starting April 1, 2021, we will begin charging Value Added Tax (VAT) at a rate of 16% to consumers, and these charges will show up on invoices issued on May 1, 2021.”
Invoices for customers who have a valid VAT ID in Kenya will not include the VAT charge, but these customers are obliged to provide details of their VAT obligations on the site’s billing page.
Other hosting services are expected to comply with the government directives and add VAT to their clients residing in Kenya.
The latest development has emerged soon after Google’s recent announcement that all content creators outside the US who monetise their content through AdSense will be required to pay tax to the US.
“All monetising creators on YouTube, regardless of their location in the world, are required to provide tax info. Please submit your tax info as soon as possible. If your tax info isn’t provided by May 31, 2021, Google may be required to deduct up to 24% of your total earnings worldwide,” reads part of a statement from Google.