In compliance with the new digital service tax recently introduced by the Kenya Revenue Authority (KRA), Facebook, has announced that Kenyans using the platform to advertise their businesses will now be paying for value-added tax (VAT).
The VAT will be calculated using local rates.
The American social media company updated consumers saying that the tax will apply to individuals who use the platform in marketing and selling their products.
The notice read in part, “This applies to advertisers whose 'Sold To' country on their business or personal address is set to Kenya.”
Advertisers to Kenya who shall have not confirmed whether they are advertising for business is another lot that will be affected by the newly introduced taxes
“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 in effect as from April 1, 2021 and more than 8,000,000 Facebook users in Kenya are likely to be affected.
Only those will have met the criteria provided, according to the statement, will be liable.
Facebook clarified that the taxes are only added when a user purchases a Facebook ad but fails to confirm that they are doing it for business.
In essence, when users promote their personal pages for branding purposes, they will be charged VAT which will be later remitted to KRA.
However, if a user promotes a post for his or her business page, there will be no VAT as it is already factored in the cost of the service.
Facebook explained, “VAT is added whenever you are charged for your ads if you are not purchasing Facebook ads for business purposes.”
Users can go to the Ad Accounts Settings of Ads Manager to clarify why they are purchasing the ads.
The Ads Manager is the platform which allows one to check the box to confirm why they are buying the adverts.
It is the responsibility of individual users to do a self-assessment and pay VAT as per the Kenya’s tax codes.
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