Business networking platform LinkedIn has announced a rates increase for premium services in Kenya by up to Sh1400 following the government’s introduction of 16 percent value-added tax (VAT) on digital transactions.
The tech firm increased the subscription prices from May 11, setting the stage for higher operating costs for businesses.
Kenya introduced a 16 percent VAT on digital transactions for foreign companies through the Finance Act of 2019 but gave firms a grace period of six months to comply.
In a statement to its members, LinkedIn said, “We want to provide you with an important tax update related to Kenya tax that will impact your LinkedIn purchase(s). Kenya has introduced tax at 16 percent on e-Services. In order to comply with these laws and regulations, this tax will be added to your current LinkedIn purchase starting on May 11, 2022.”
“If you add a valid business PIN ID to your profile, LinkedIn will not charge you tax. However, please note, if a valid Kenya tax number has been provided, this will be accepted by LinkedIn as notification of your responsibility to account for VAT under the reverse charge mechanism.”
LinkedIn now joins video-on-demand service Netflix, tech giant Google, cloud infrastructure provider Digital Ocean, communications software Muck Rack, and Google Workplace in paying the tax that targets foreign-owned firms not incorporated locally.
Individuals and companies that use Facebook to advertise are also paying the 16 percent VAT as Kenya seeks to collect billions of shillings from e-commerce.
The use of online platforms received a major boost two years ago as firms and individuals turned to remote working and interaction platforms to curb the spread of the coronavirus disease.