Earlier this evening I received an email from Google indicating that they will start taxing 16% VAT for Google Play purchases in Kenya in-line with tax changes that the Kenya Revenue Authority (KRA) implemented from January 2021. Below is an excerpt of the same:

Tax changes for Google Play purchases in Kenya

Due to the expansion of the tax legislation in Kenya, Google will be responsible for determining, charging, and remitting 16% Value-Added Tax (VAT) for Google Play Store paid app and in-app purchases made in Kenya, effective April 8, 2021.

Even if you’re not located in Kenya, this change in tax laws will still apply for purchases made by Kenya customers.

Google will send the applicable taxes for paid app and in-app purchases made by customers in Kenya to the appropriate authority, so you won’t need to calculate and remit VAT for Kenya separately for these customers’ purchases. No other action is required on your part.

Google will also begin using VAT-inclusive pricing in Kenya, which means that prices shown on Google Play will include all taxes, regardless of where your business is located. This change will apply to all paid apps and in-app purchases made by customers in Kenya.

What this effectively means is that if you are using a paid mobile app or do in-app purchases via an app downloaded from Google Play the 16% VAT will be incorporated into all transactions. There is no effort required by mobile app users or developers from this change since Google will do the same automatically. Ultimately it will mean that the cost of paid mobile apps and in-app purchases via Google Play will become more expensive as a result of these changes which were inevitable once KRA’s digital tax laws went into effect earlier this year.

Going forward, it would seem that many other local and global digital service providers will start applying the new digital taxes if they haven’t done so already on this basis to remain compliant or risk losing their ability to operate as a legitimate business in Kenya. I imagine services that we consider as digital utilities such as taxi-hailing and e-commerce platforms will soon be communicating such updates as Google has done. Change is definitely coming!