Meta Platforms Inc, the company that owns Facebook, WhatsApp and Instagram, has updated its terms allowing the tech giant to share information with tax and investigative authorities from January, handing the taxman a new tool to net businesses using its platforms to make money.
In its updated terms to be effective from January 3, 2023, the technology firm says entrepreneurs using the platform to advertise or sell their products will automatically offer their consent for sharing of dealings of the business persons to a governmental entity or body if it believes that disclosure would assist in a lawful investigation.
The dealings include the advertising contents and all information associated with the publicity placed on its platform.
This will be a major boost to the Kenya Revenue Authority (KRA), which has in the recent past increased its surveillance on Kenyans displaying lavish lifestyles on social media but paying little or no taxes.
The KRA has also been struggling to get companies doing business online to pay the digital service tax, which is equivalent to 1.5 percent of the gross transaction value.
The taxman plans to collect Sh13.9 billion from the digital tax over the next three years from firms using the Internet to market and sell products in Kenya.
It has identified foreign firms, which derive or accrue income in Kenya through digital marketplaces — selling exclusively online or providing platforms for such deals — as a major driver of tax receipts in coming years.
The digital service tax came into effect at the start of January 2021. It is levied on the sale of e-books, movies, music, games and other digital content. It also applies to foreign companies.
The KRA target signals that firms like Amazon and Netflix are forecast to generate sales of about Sh926 billion in three years.
The taxman is racing to bring more people into the tax bracket and curb tax cheating and evasion in the quest to meet and surpass targets.
It has been flagging wealthy individuals that have been hiding their sources of income while engaging in luxury spending and accumulation of property, including the purchase of homes and big cars.
Besides scouring social media sites, the agency has been using various databases to pursue suspected tax cheats, among them bank statements, import records, motor vehicle registration details, Kenya Power records, water bills and data from the Kenya Civil Aviation Authority (KCCA), which reveal individuals who own assets such as helicopters.
Kenya Power meter registrations are helping the taxman to identify landlords, some of whom have been slapped with huge tax demands.
Car registration details are also being used to smoke out individuals who have little to show in terms of taxes remitted.
Meta also cautioned failure to pay the advertising account’s dues on time may result in legal action.
The firm says if a payment method fails or an account is past due, it will take additional steps to collect past due amounts including hiring a debt collection agency.
“You will pay all expenses associated with such collection, including reasonable legal fees. Past due amounts will accrue interest at 1.0 percent per month or the lawful maximum, whichever is less,” the company said.
Meta acknowledged it can use information about one’s interactions with ads and other commercial content, including monitoring one’s creditworthiness and categorizing clients as invoiced or non-invoiced.
“Meta may classify clients as invoiced clients based on factors such as ad spend and creditworthiness. You understand that, from time to time, we run tests on our Self-serve Ad Interfaces and related systems, which may affect your use and experience thereof, including campaign performance,” the terms of service read in part.
“If you are making direct debit payments, you agree that we can charge you any amount that falls within the range that you agreed to upon sign-up. We will notify you in advance if any charge will exceed the agreed-upon range.”
In Kenya, there are over 12 million Facebook users, about two million Instagram users and 22.2 million daily WhatsApp users in 2022, according to analytics firm Statista.
Amid increasing data restrictions and changes in the digital advertising landscape, Meta is swamped by lawsuits on data leaks and privacy breaches.
According to Kenya’s Data Protection Act, personal data shall not be transferred outside the country unless there is proof of adequate safeguards or consent from the data subject.