Google, a US technology company that deals in Internet-related services and products, has indicated that it will start taxing 16% Value Added Tax(VAT) for Google Play purchases in Kenya, effective April 8th, 2021.
This change follows the introduction of digital tax law in Kenya, which came into effect in January 2021.
Google will automatically collect the tax and remit to KRA
The tech firm will determine, charge and then remit 16% VAT for Play Store paid app and in-app purchases made in Kenya, effective April 8th, 2021.
Analysts say that the cost of paid mobile apps and in-app purchases via Google Play will thus become more expensive due to digital tax.
Even if one is not located in Kenya, the digital tax charge will still apply to Kenya customers’ purchases.
The tech firm will send the applicable taxes for the paid app and in-app purchases made by customers in Kenya to the appropriate authority, so you will not need to calculate and remit VAT for Kenya separately for these customers’ purchases.
The tech giant will also begin using VAT-inclusive pricing in Kenya, which means that prices shown on Google Play will include all taxes, regardless of where your business is located.
This change will apply to all paid apps and in-app purchases made by customers in Kenya.
If one uses a paid mobile app or makes in-app purchases via an app downloaded from Google Play, these transactions will attract 16% VAT. Google will execute these tax charges automatically.
Other local and global digital service providers will also start applying the new digital taxes to remain compliant or risk losing their license to do business in Kenya.
Other digital utilities, such as taxi-hailing and e-commerce platforms, will soon follow what the US firm has done.
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