Zoom to start charging VAT in Kenya from August

If you are registered for VAT, then no VAT will be charged on the supplies made to you by Zoom.

In Summary

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

•As such, Zoom is required to collect and remit VAT on supplies made to non-VAT registered customers in Kenya.

A screenshot of Zoom conference application.
MEETING REMOTELY: A screenshot of Zoom conference application.
Image: COURTESY

From August 1, you will be required to pay VAT on your Video conferencing company Zoom Subscription.

In a turn of events on Monday, Zoom said that  Zoom video communications, will begin charging Kenyan VAT on or shortly after August 1 on its supplies to customers in Kenya.

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

As such, Zoom is required to collect and remit VAT on supplies made to non-VAT registered customers in Kenya.

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," the company said.

"The application of these taxes to business with online activities is a complex and evolving area."

It noted that it constitutes 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 taxes where applicable.

Generally, VAT is invoiced by the supplier that is selling goods or services and collected from the customer. Subsequently, the supplier reports and remits the collected VAT to the tax authorities.

Where imported taxable services (including electronic services) are provided by a supplier that is non-resident in Kenya (as is the case for Zoom) the responsibility to collect and remit VAT depends on whether the Kenyan customer is registered for VAT or not.

If you are registered for VAT in Kenya, you should provide Zoom with your Personal Identification Number (PIN) and a declaration that you are registered for VAT in Kenya.

If you are registered for VAT, then no VAT will be charged on the supplies made to you by Zoom.

However, you may be required to self-assess for the VAT under the “reverse charge” mechanism.

If you are not registered for VAT in Kenya, VAT shall be collected on the supplies made to you by Zoom.

Zoom, once a niche tech name, shot to prominence during the pandemic.

Millions have turned to the app to socialise with family and friends, teach and meet with colleagues.

Zoom founder and chief executive Eric Yuan said the company was converting more and more businesses to paying customers, as they adapt to "a new world of work from anywhere".

At the end of October last year, Zoom had nearly 434,000 business customers that had more than 10 employees - up approximately 485% from the same quarter a year ago.

The surge has lifted revenue and profits and sent the firm's stock soaring.

Zoom said sales in the August-October period hit $777 million, up 367% year-on-year. Profits were $198.4 million in the quarter, compared to $2.2 million in the same period a year earlier.