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As Kenya's 16% VAT on digital transactions takes effect, LinkedIn responds by hiking subscription fees for Kenyan users

May 18th 2022, 11:00:15 am

LinkedIn users in Kenya will now pay additional membership fees to access special features or services on the career-focused and jobs advertising social media platform.

LinkedIn hikes subscription rates for Kenyan users

Business Insider Africa gathered that the company hiked its membership rates, with effect from May 11th, following the implementation of a 16% value added tax (VAT) on digital transactions in the East African country.

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Part of a communique by LinkedIn to this effect 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”.

The communique further noted that users who provide their valid PIN IDs will not be subject to the tax. That's because "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.”

This clearly shows that LinkedIn is pushing the costs of the VAT to its Kenyan users instead of incurring them.

Do note that LinkedIn is not the only tech firm that has done this in the wake of the 16% VAT on digital transactions. As a matter of fact, Kenyan users of Facebook, Netflix and even Google have been paying the 16% VAT longer than LinkedIn users.

Below are the new rates for different LinkedIn services

  • Recruiter Lite: Users will now pay KSh10,719 (about $92) to use this feature which makes it easier for recruiters to reach out to and manager job applicants. The new rate is more than KSh9,242 ($79) rate that previously applied.
  • Sales Navigator Account: For this LinkedIn feature which is used mainly for advertising purposes, users will now pay KSh8,759 ($75) as against KSh7,551 ($64).
  • Premium Business Account: The rate for premium business accounts also increased to KSh5,149 ($44) from KSh4,439 ($38).
  • Career Account: Finally, the rate for career accounts increased from KSh2,775 ($24) per month to KSh3,219 ($28).
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It should be noted that a handful of African countries have been introducing various forms of digital tax aimed specifically at big tech companies that make money across Africa even without being incorporated in any of these countries. This was one of the issues that came up during the recent face-off between Nigeria and Twitter.

Recall that late last year, about 130 countries reached an agreement to address the global tax challenges that have risen, following the digitisation of the global economy. Championed by the Organisation for Economic Co-operation and Development (OECD), the agreement aims to, among other things, reform the global tax rules in such a way that gives countries more right to impose taxes on multinational digital corporations like Facebook and Google.

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An earlier article by Business Insider Africa detailed some of the ways this was a wonderful development for African countries. The Africa Tax Lead at Ernst & Young, Larry Eyinla, even noted that "this is actually a fundamental step in the right direction."

Meanwhile, there is a concern that these global tech giants may want to completely evade these new taxes from African countries by simply pushing the costs to their users.

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Emmanuel Abara Benson

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