Meta (formerly Facebook) has announced that all Kenyans who use their advertisement services on either of its platforms (Facebook and Instagram) both businesses and personal accounts, will now be required to pay 16% Value-Added Tax (VAT), effective November 1st, 2022, following the new VAT laws and requirements for the industry.
According to the official statement from Meta “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.”
Over the years, the Kenyan government has explored and implemented various methods of expanding its tax net, which has resulted in either amendment to existing law or the enactment of a full-fledged law to serve that purpose. For instance, the state enacted the digital service tax, or DST, which imposed a 1.5 percent digital tax on the gross transaction value of digital services. It went into effect in January 2021 and was to be paid by people who earned money by providing services and products on the digital marketplace. The state did not stop there: the rate of the digital service tax was raised from 1.5 percent to 3 percent in 2022, according to the Finance Act.
Previously, an amendment to the same law proposed a 10% additional tax (excise duty) on phone imports. Every imported SIM card was also subject to an additional excise duty of $0.41 (KES 50.)
How to add your VAT ID to your Meta Platforms for advertising:
- First and foremost, you must enter your VAT ID into your page’s payment settings.
- If you are VAT registered and provide your VAT ID, your VAT ID will appear on your ad receipts.
- If you are a VAT-registered business in Kenya, Meta clarifies that if you are entitled to recover the VAT, this may help you recover any VAT you paid to the Kenyan tax authorities.
- Furthermore, regardless of whether you are purchasing Meta Ads for business or personal use, VAT is added whenever you are charged for your ads.
“Because VAT is added on top of charges, you won’t reach your billing threshold faster, but you may be charged more than your billing threshold amount,” Meta clarified further.
Meta concludes that if you pay for ads with a manual receipt method, VAT is accounted for and applied at the applicable local rate when your ad account is funded to determine the total balance available.