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Kenya VAT on digital services April 2021

  • Oct 28, 2020

Kenya has introduced Value Added Tax on foreign providers of digital or electronic services through the Value-Added Tax (VAT) (Digital Marketplace Supply) Regulations, 2020, with a six-month implementation period to 1 April 2021. This is in addition to a potential Digital Services Tax on gross revenues of providers of certain digital supplies to consumers. Check Avalara's global VAT on digital services tracker.

VAT on digital services

It is proposing to levy 14% VAT on e-service provided via digital marketplaces. Services to be included are:

  • Downloads of movies, apps and electronic books
  • Subscription-based media, including streaming TV or music, gaming, news or magazines
  • Software downloads
  • Electronic data management
  • Supply of streaming films and games
  • Tickets bought online for live events
  • Online e-learning
  • Audio content bought online and payable on any device
  • Sharing economy website services, including ride-sharing
  • Any other digital marketplace supply as may be determined by the Kenyan Commissioner of Taxes. 

Simplified registration process

Any non-resident providing these services to Kenyan consumers would need to VAT register to the Commissioner.  This includes providing services through a digital marketplace. This will be facilitated by a simplified VAT registration procedure, which will be available online. Liable providers must register within 30 days of the publication of the regulations. Note, there is no facility to recover Kenyan input VAT through this registration. Alternatively, providers may apply for a regular VAT registration although will require a local tax agent to represent the taxpayer. Also, there is no credit refund mechanism on the simplified registration. There is no VAT registration threshold.

B2C transactions must be accompanied with a VAT receipt. Returns are then due by the 20th of the month following the reporting period.

Defining where to tax 

Registered providers will need to determine if their customer is consuming the services in Kenya. They may rely on the following factors to determine this place of supply:

  • Postal adddress
  • Credit card or bank transfer details
  • IP address
  • Mobile SIM card country code

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