Starting from next month, paid users of Zoom in Kenya will have to fork out an additional fee for their subscription, as the government is set to impose value-added tax (VAT) on several online services to operate in the country.
In an email sent to paid subscribers on Monday, Zoom announced that starting Aug. 1, the Kenyan government will levy a 16 per cent VAT to be borne by the customer.
“Like many companies with a growing international presence, Zoom is routinely evaluating its indirect tax collection and remittance obligations,” the company said.
“The application of these taxes to business 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.
Zoom currently prices its lowest subscription package, which offers unlimited group meetings among other perks at Ksh15,000 (about $150), while the highest-paid package costs Ksh25,000 ($250) per year.
With the VAT implementation, Kenyan individuals and companies will now pay at least Ksh2,500 ($25) more for the cheapest package and at least Ksh4,100 ($41) more for the highest-priced package.
Zoom is not the only digital service to recently fall under the microscope of the Kenyan taxman. 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, which is charged at 1.5 per cent of the gross value of a transaction (exclusive of VAT).
The regulation requires individuals and firms that supply or expects to supply taxable goods and services worth at least Ksh5 million ($50,000) in a year to register for VAT. However, Kenyans registered for VAT will be exempted from paying the tax.