American social media giant, Facebook, has moved to comply with the new digital service tax introduced by the Kenya Revenue Authority (KRA) in January this year.
Kenyans using Facebook to advertise will now be paying for value-added tax (VAT) which will be calculated using local rates.
In their regular updates to consumers, the technology company said that the VAT will apply to individuals who use the platform as a means to market and sell their products.
“This applies to advertisers whose 'Sold To' country on their business or personal address is set to Kenya,” the notice read in parts.
The other group that will be affected by the newly introduced taxes are advertisers to Kenya who shall have not made confirmation as to whether they are advertising for business.
“If you confirm you are advertising for business purposes, Facebook does not add VAT to your purchase of Facebook ads,” the notice further stated.
The taxes will be affected from April 1, 2021 with a section of the over 8,000,000 Facebook users in Kenya expected to be affected.
Notably, not all the Facebook users in Kenya will be affected. The statement showed that those who will be liable will have met the criteria it provided.
The social media platform said the taxes are only added when you purchase a Facebook ad but fail to confirm that you are doing it for business.
For example, if you are promoting your personal page for branding purposes, you will be charged VAT which will be later remitted to KRA. However, if you promote a post for your business page, the VAT will not come in as it is already factored in the cost of the service.
“VAT is added whenever you are charged for your ads if you are not purchasing Facebook ads for business purposes,” Facebook explained.
Similarly, if you confirm you are purchasing business adverts, Facebook will not add VAT to the sum the user is supposed to pay.
In order to make it known why you are purchasing the ads, users can go to the Ad Accounts Settings of Ads Manager - the platform which allows one to check the box to confirm why they are buying the adverts.
Individual users are responsible for doing a self-assessment and paying VAT in respect to the Kenya’s tax codes.
Another notable aspect of the tax is that since VATs are paid in addition to the billing amount, users should occasionally expect to pay amounts more than the actual bills.
The development comes after the Kenya Revenue Authority Introduced a digital tax in which all earnings done and completed online are subjected to taxation.
Facebook is also one of the digital platforms used by Kenyans to advertise their businesses as people continue to embrace online selling and buying.
