Facebook advertisements in Kenya will be subject to the nation’s 16% value-added tax (VAT). The announcement was made by Meta. This impacts anyone who runs advertisements on Facebook or Instagram. Therefore, each time you run an advertisement on the platforms, you will pay a higher tax rate.
Meta made the following statements: “Beginning November 2022, Meta ads in Kenya are subject to a value-added tax (VAT) at the applicable local rate. This applies to all advertisers whose ‘Sold To’ country on their business or personal address is set to Kenya.”
“If you’re registered for VAT and provide your VAT ID, your VAT ID will show up on your ads receipts. In the event that you’re entitled to recover the VAT, this may help you recover any VAT you paid to the Kenyan tax authorities if you are a VAT-registered business in Kenya.”
No matter whether advertisers are paying for advertisements for their businesses or for their personal use, VAT will be added whenever they are, according to a statement on the company’s support centre.
Read also: “1 million Facebook accounts” may have been hijacked, says Meta
Kenyan business owners must register for the VAT, which is levied on products and services produced or delivered in the nation if their annual taxable supply turnover exceeds Ksh 5 million ($41,150).
According to TechTrendsKE, the Kenya Revenue Authority (KRA) announced plans to boost the tax collected from IT companies that operate in the nation or facilitate digital payments from 1.5% to 3% in April of this year.
Directive on The VAT ID
Your VAT ID must first be added to your page’s payment settings. Your VAT ID will appear on your ad receipts if you are registered for VAT and supply it.
According to Meta, if your firm is VAT-registered in Kenya and you are eligible to recover VAT, this could aid in your ability to recoup whatever VAT you may have previously paid to Kenyan tax officials.
Furthermore, regardless of whether you purchase Meta Advertisements for commercial or non-commercial use, VAT is added anytime you are charged for your ads.
The Impact of The Kenyan Government on This
Kenya’s government has been attempting to take advantage of every opportunity to increase tax revenue. Numerous modifications to tax legislation have been enacted in the previous few years under the guise of Parliament Acts. Kenyans have had to dig deeper into their wallets to meet their tax commitments as a result of some of these changes and developments, the majority of which take the shape of adjustments to finance legislation. It should be kept in mind that some of the suggestions aimed to capture money from internet-based/digital services, which have grown to be quite profitable for the companies who provide them.
For instance, the state implemented the DST, or digital service tax, which imposed a 1.5 per cent tax on the gross transaction value of digital services. It came into force in January 2021 and was levied against those who made money by selling goods and services on the internet. The state didn’t stop there; the Finance Act of 2022 boosted the rate of the digital service tax from 1.5 per cent to 3 per cent.