Facebook to Charge VAT for Ads in Kenya

Beginning 1 April 2021, Facebook ads in Kenya are subject to a value-added tax (VAT) at the applicable local tax rate. This applies to advertisers whose ‘Sold To’ country on their business or personal address is set to Kenya and who haven’t confirmed that they’re advertising for business purposes.

In the Ad Accounts Settings of Ads Manager, you can check the box to confirm whether or not you’re advertising for business purposes and responsible for self-assessing and paying VAT in accordance with the Tax Code of Kenya. If you confirm you’re advertising for business purposes, Facebook doesn’t add VAT to your purchase of Facebook ads.

VAT is added whenever you’re charged for your ads if you’re not purchasing Facebook ads for business purposes. Because VAT is added on top of charges, you won’t reach your billing threshold faster, but you may be charged more than your billing threshold amount. If you pay for Facebook ads with a manual payment method, VAT is accounted for and applied at the applicable local rate when your ad account is funded to determine the total balance available.

Last year, Kenya Revenue Authority (KRA) introduced the Finance Act 2020 Digital Service Taxes (DST) on income from services provided through the digital marketplace in Kenya and will be applied at 1.5 per cent on the gross transaction value (exclusive of VAT).

In a public notice, the taxman noted that an increasing number of influencers do not file tax returns or pay taxes on transactions.

Several businesses have scaled up their presence in digital platforms where they now routinely conduct and conclude transactions.

In recognition of this shift, many jurisdictions around the world have in the recent past enacted tax legislation aimed at taxing the digital economy.

These Regulations aim at ensuring that VAT is charged on taxable services supplied in Kenya through the digital marketplace by Business to Customer (B2C) transactions.

Taxing digital market suppliers in the country became effective on January 2, this year, a move that will see the Kenya Revenue Authority (KRA) widen its revenue bracket.