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Kenyans to pay more for Zoom

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 Value Added Tax (VAT) on the service.

Via an e-mail sent to its customers in Kenya, the firm said Kenyans will start paying “on or shortly after August 1, 2021” for its supplies to customers in the country.

Zoom is registered for VAT in Kenya as a non-resident supplier of electronic services.

“The application of these taxes to businesses with online activities is a complex and evolving area. Zoom continues to review such developments, as well as the nature and extent of its activities in different jurisdictions, and, based on such regular review, will start charging indirect taxes where applicable,” the message read in part.

This will mostly affect corporates since they are the ones who usually pay for Zoom services.

“Like many companies with a growing international presence, Zoom is routinely evaluating its indirect tax collection and remittance obligations.”

While many users of Zoom use the basic plan, which is free, many larger businesses among other organizations and governmental agencies pay between Sh15,000 ($150) and Sh25,000 ($240) for licenses.

Zoom has found prominence since the onset of the Covid-19 pandemic, becoming the most used video conferencing application in the world.

In the 12 months to January 31, Zoom’s annual sales quadrupled to $2.65bn and its share price has risen more than 400 percent since the start of 2020, though it remains below its October high.

Last year, Kenya Revenue Authority (KRA) introduced the Finance Act 2020 Digital Service Taxes (DST) on income from services provided through the digital marketplace in Kenya and will be applied at 1.5 percent on the gross transaction value (exclusive of VAT).

In a public notice, the taxman noted that an increasing number of influencers do not file tax returns or pay taxes on transactions.

Several businesses have scaled up their presence in digital platforms where they now routinely conduct and conclude transactions.

In recognition of this shift, many jurisdictions around the world have in the recent past enacted tax legislation aimed at taxing the digital economy.

These Regulations aim at ensuring that VAT is charged on taxable services supplied in Kenya through the digital marketplace by Business to Customer (B2C) transactions.

Taxing digital market suppliers in the country became effective on January 2, this year, a move that will see KRA widen its revenue bracket.

Zoom now joins Facebook and YouTube to deduct taxes.