Vat on Digital Services

Digital marketplace” means an online platform which enables users to sell or provide services, goods or other property to other users.

Taxable supplies made through a digital marketplace digital Scope of taxable supply through a marketplace include

  •  Downloadable digital content including downloadable mobile applications, e-books and films;
  • Subscription-based media including news, magazines and journals;
  • Over-the-top services including streaming television shows, films, music, podcasts and any form of digital content;
  • Software programmers including software, drivers, website filters and firewalls;
  • Electronic data management including website hosting, online data warehousing, file-sharing and cloud storage services;
  • Music, and games;
  • Search engine and automated help-desk services including customizable search engine services;
  • Tickets for live events, theatres or restaurants;
  • Distance teaching through pre-recorded media or e-learning including online courses and training;
  • Digital content for listening, viewing or playing on any audio, visual or digital media;
  • Services that links the supplier to the recipient including transport hailing services or platforms;
  • Electronic services
  • Any other service provided through a digital marketplace that is not exempt under the Act.

PERSONS LIABLE TO VAT ON DIGITAL SERVICES

VAT regulations on digital services apply to non-resident persons making supplies to consumers based in Kenya and the obligation to charge and remit VAT lies with the non-resident supplier of the services. The requirement to account for VAT only applies in relation to services provided to a Kenyan consumer in a business-to customer (B2C) transaction. Where a non-resident supplier engages in a business-to-business transaction (B2B), such transactions will be deemed to be imported services and the Kenyan business importing the services will be liable to account for VAT on the imported services, through the reverse VAT charge mechanism. The Kenyan business importing the business is required to notify the exporter is not required

Non registered person is not required to issue a tax invoice rather should issue an invoice or receipt better known as simplified tax invoice.

Information required under simplified online registration framework

  • The name of the business including the business’s trading name;
  • The name of the contact person responsible for tax matters;
  • The postal address or registered address of the business and its contact person
  •  The telephone number of the contact person;
  • The email address of the contact person;
  •  The websites or uniform resource locators (URLs) of the supplier through which business is conducted; (g) the national tax identification number issued to the supplier in the supplier’s jurisdiction;
  • The certificate of incorporation or registration issued to the business in the country where the business is incorporated; and
  •  Any other information that the Commissioner may require.

Appointment of tax representative

A person from an export country making a business-to-consumer supply to a recipient in Kenya who elects not to register in accordance with regulation 7 shall appoint a tax representative in accordance with section 15A of the Tax Procedures Act, 2015.

Place of supply of Digital services

A supply on a digital marketplace shall be deemed to have been made in Kenya where the recipient of the supply is in Kenya.

In determining whether the recipient of a supply is in Kenya, the Commissioner shall consider—

  • Whether the payment proxy including credit card or debit card information and bank account details of the recipient of the digital supplies is in Kenya; or
  •  Whether the residence proxy including the billing or home address or access proxy including internet address, mobile country code of the SIM card of the recipient is in Kenya.

Time of supply of Digital services

The time of supply on a digital marketplace shall be the earlier of—

  1. The date on which the payment for the supply is received in whole or in part; or
  2. The date on which the invoice or receipt for the supply is issued.