In a statement by the Kenya Revenue Authority(KRA), it is noted that digital market places will now have to charge VAT on all sales made on their platforms.
KRA: Charge VAT on Online Sales
It has come to our attention that some businesses engaged in trading on digital platforms are not charging VAT on transactions made through their platforms. Specifically, the owners and clients have been found not to honour their tax obligations.
KRA informs clients and owners of digital market places that they should charge on VAT on:
- All sales made through their platforms
- The commission charged to vendors for the use of their digital platforms to transact.
All the noncompliant owners could encounter penalties and interests on outstanding taxes. If fraud is detected criminal proceedings will be brought against the offenders.
The struggle does not end here. Every month by 20th, you need to file the VAT and if you don’t there is a penalty of KES 10,000.
So this means that you will have to register your company, obtain a VAT number and get an ETR machine for your company.
Who Does This Apply To?
VAT applies on those apps because you are providing a service which is not zero-rated or exempted. Said KRA deputy commissioner for corporate policy, Maurice.
This move comes after KRA introduced VAT tax obligations for app developers trading in the country.
Apart from those that sell on these apps, these taxes apply to
- Apps with in-app purchases
- Those that sell goods and services
- Apps that require users to pay before downloading.
KRA plans to work with the Communications Authority of Kenya (CAK) to keep an eye on all digital transactions in Kenya. This is to facilitate the collection of the taxes and nab tax evaders.
“Working with the Communications Authority, we should be able to get the data. But we live in a self-assessment period and expect that if you are generating revenue of that much, you self-declare so that you don’t pay extra penalties, Says KRA