With its Headquarters in San Jose, United States, Zoom Video Communications Inc has informed its customers in Kenya of plans to begin charging Value Added Tax(VAT) on its supplies beginning August 1st, 2021.
It joins Facebook and YouTube, which is already charging VAT on supplies to consumers in Kenya.
With the onset of the COVID-19 pandemic and the shift worldwide to work from home, Zoom has been one of the most widely used 3-in-1 meeting platforms in the world with HD video conferencing, mobility and web meetings.
The video conferencing app said that, like many firms with a growing international presence, it is routinely evaluating its indirect tax collection and remittance obligations.
According to communication to clients from Zoom, applying these taxes to businesses with online activities is a complex and evolving area.
Zoom said it continues to review such developments and the nature and extent of its activities in different jurisdictions. Based on such regular review, it will therefore start charging indirect taxes where applicable.
Zoom to collect VAT from those not registered
The App will issue a VAT invoice showing the tax at the appropriate rate for customers not registered for VAT in Kenya.
Clients registered for VAT in Kenya must provide Zoom with their Personal Identification Number (PIN) and a declaration that they are registered for VAT in Kenya.
If one is registered for VAT, then no VAT will be charged on the supplies made to them by this video app; however, one will be required to self-assess for the VAT under the “reverse charge” mechanism.
If one is not registered for VAT in Kenya, VAT shall be collected on the supplies made to them by Zoom.
If a customer’s ‘Sold To’ location is in Kenya, and the customer has not provided a valid PIN and a declaration that they are registered for VAT in Kenya, Zoom will charge Kenyan VAT on its invoices.
If a customer in Kenya does not provide a PIN or has a PIN but is not registered for VAT in Kenya, Zoom will charge VAT on the supplies made to them.
Businesses will be charged for using Zoom in Kenya, the firm has announced.
The video conferencing app says it has been forced to pass over the payment to its consumers after the government imposed a 16% VAT on the service.
While many users of Zoom use the basic plan, which is open, many larger businesses, among other organizations and governmental agencies, pay between KSh15,000 ($150) and KSh25,000 ($240) for licenses.
Many firms have stepped up their presence on the digital marketplace in Kenya, prompting Kenya Revenue Authority(KRA) to introduce the Digital Service Tax, now at the rate of 1.5% of the gross transaction value( exclusive of VAT).
More countries around the world are now enacting laws aimed at taxing the digital economy.
Taxing digital market suppliers in the country became effective on January 2, 2021.