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The Value Added Tax (Digital Marketplace Supply) Regulations

Legal Notice 190 of 2020

This is the latest version of this Legal Notice.
The Value Added Tax (Digital Marketplace Supply) Regulations
Citation
Legal Notice 190 of 2020
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Value Added Tax Act
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English
Type
Legal Notice
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LAWS OF KENYA

VALUE ADDED TAX ACT

THE VALUE ADDED TAX (DIGITAL MARKETPLACE SUPPLY) REGULATIONS

LEGAL NOTICE 190 OF 2020

  • Published in Kenya Gazette Vol. CXXII—No. 182 on 9 October 2020
  • Commenced on 9 October 2020
  1. [Amended by Value Added Tax (Digital Marketplace Supply) (Amendment) Regulations, 2022 (Legal Notice 68 of 2022) on 27 May 2022]
  2. [Revised by 24th Annual Supplement (Legal Notice 221 of 2023) on 31 December 2022]

1. Citation

These Regulations may be cited as the Value Added Tax (Digital Marketplace Supply) Regulations.

2. Interpretation

In these Regulations, unless the context otherwise requires—"business-to-business transaction" deleted by LN 68 of 2022, r. 2;"business-to-consumer transaction" deleted by LN 68 of 2022, r. 2;"digital marketplace supply" means the supply of a service made on a digital marketplace;"digital marketplace" has the meaning assigned to it in section 5(9);"export country" means any country other than Kenya and includes any place which is not situated in Kenya;"intermediary" means any person who facilitates the supply of services through the digital marketplace and is responsible for issuing invoices or collecting payments for the supply;"Personal Identification Number" or "PIN" has the meaning assigned to it in section 2 of the Tax Procedures Act (Cap. 469B);"recipient", in relation to any supply of services, means the person to whom the supply is made;"tax" has the meaning assigned to it under section 2(1); and"tax period" means a calendar month.[LN 68 of 2022, r. 2.]

3. Scope of taxable supply through a digital marketplace

Taxable supplies made through a digital marketplace include—
(a)downloadable digital content including downloadable mobile applications, e-books and films;
(b)subscription-based media including news, magazines and journals;
(c)over-the-top services including streaming television shows, films, music, podcasts and any form of digital content;
(d)software programmes including software, drivers, website filters and firewalls;
(e)electronic data management including website hosting, online data warehousing, file-sharing and cloud storage services;
(f)music, and games;
(g)search engine and automated helpdesk services including customisable search engine services;
(h)tickets for live events, theatres or restaurants;
(i)distance teaching through pre-recorded media or e-learning including online courses and training but excluding education services exempted under the First Schedule to theAct” ;
(j)digital content for listening, viewing or playing on any audio, visual or digital media;
(k)services that links the supplier to the recipient including transport hailing services or platforms;
(l)electronic services under section 8(3); and
(m)any other service provided through a digital marketplace that is not exempt under the Act.
[LN 68 of 2022, r. 4.]

4. Application of tax

(1)Tax shall apply to taxable supplies specified under regulation 3 when supplied in Kenya.
(2)Deleted by LN 68 of 2022, r. 3.
(3)Deleted by LN 68 of 2022, r. 3.
(4)Where the supplier from an export country is notified as provided under paragraph (3), the supplier shall not be required to charge the tax on the supply to the business entity.
(5)Deleted by LN 68 of 2022, r. 3.[LN 68 of 2022, r. 3.]

5. Registration

(1)A person supplying the taxable services specified in regulation 3 shall register for tax in Kenya if—
(a)the supplies are made by a person from an export country to a recipient in Kenya in a business-to-consumer transaction; and
(b)the person is conducting business in Kenya in accordance with section 8 (2) and any of the following circumstances apply—
(i)the recipient of the supply is in Kenya;
(ii)the payment for the services is made to the supplier in the export country from a bank registered under the Banking Act; or
(iii)the payment for the services that is made to the supplier in the export country is authorised in Kenya.
(2)A person from an export country who makes a business-to-consumer supply of services to a recipient who is in Kenya shall register for tax through a simplified tax registration framework in accordance with regulation 7.
(3)A person registered under paragraph (2) shall declare and pay tax on the supplies made on the digital marketplace at the rate specified in section 5 (2)(b).

6. Appointment of tax representatives

Despite regulation 5(2), 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 (Cap. 469B)

7. Simplified tax registration framework

(1)A supplier from an export country who makes supplies on a digital marketplace shall register under the simplified tax registration framework specified under this regulation.
(2)An application for registration under the simplified tax registration framework shall be done through an online registration form prescribed by the Commissioner.
(3)The information required for registration under paragraph (2) shall include—
(a)the name of the business including the business's trading name;
(b)the name of the contact person responsible for tax matters;
(c)the postal address or registered address of the business and its contact person;
(d)the telephone number of the contact person;
(e)the email address of the contact person;
(f)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;
(h)the certificate of incorporation or registration issued to the business in the country where the business is incorporated; and
(i)any other information that the Commissioner may require.
(4)An applicant under paragraph (2) may be required to submit to the Commissioner additional documents that may be necessary to substantiate the information provided in the application.
(5)Upon registration under this regulation, the Commissioner shall issue the applicant with a PIN for the purpose of filing returns and the payment of tax.
(6)A person registered under this regulation who ceases to make taxable supplies on a digital marketplace shall apply to the Commissioner for deregistration in accordance with section 36.

8. Place of supply

(1)A supply on a digital marketplace shall be deemed to have been made in Kenya where the recipient of the supply is in Kenya.
(2)In determining whether the recipient of a supply is in Kenya, the Commissioner shall consider—
(a)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
(b)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.

9. Time of supply

The time of supply on a digital marketplace shall be the earlier of—
(a)the date on which the payment for the supply is received in whole or in part; or
(b)the date on which the invoice or receipt for the supply is issued.

10. Exemption from issuing an electronic tax invoice

A business-to-consumer supplier on a digital marketplace from an export country who is registered under these Regulations shall not be required to issue an electronic tax invoice:Provided that the supplier shall issue an invoice or receipt showing the value of the supply and the tax deducted thereon.

11. Claim for input tax

A deduction of input tax by a supplier shall not be allowed for business-to-consumer transactions for a supply on a digital marketplace.

12. Accounting for and payment of tax

(1)The tax for a supply made on a digital marketplace from an export country to a recipient in Kenya in a business-to-consumer transaction shall be paid by the supplier or the tax representative of the supplier.
(2)A registered person shall submit a return in the prescribed form and remit the tax due in each tax period to the Commissioner on or before the twentieth day of the month following the end of the tax period.
(3)Where an intermediary makes a supply on a digital marketplace on behalf of another person, the intermediary shall be required to charge and account for the tax on the supply whether such other person is registered for tax or not.

13. Amendment of returns

(1)Any amendments to a return submitted in accordance with these Regulations shall be made in accordance with section 31 of the Tax Procedures Act (Cap. 469B).
(2)Where an amendment under paragraph (1) results in the overpayment of tax, the amount overpaid shall be retained as a credit in favour of the person who overpaid and offset against the tax payable in the subsequent tax period.

14. Penalties

A person who fails to comply with the provisions of these Regulations shall be liable to the penalties prescribed under the Act or the Tax Procedures Act (Cap. 469B).

15. Transitional provisions

A supplier on a digital marketplace from an export country who is required to register under these Regulations shall apply to the Commissioner for registration within six months from the date of publication of these Regulations.
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