This interesting,

Cloud is a big space and cloud computing will shape how we consume IT Resources, This a billion dollar segment and thus tax man interest.

Apparently taxable items are not easy to understand, I guess KRA has no online product classification reference guide, which should be in place to guide any business person.

For cloud services, Have seen Local service providers levy VAT on domains, web-hosting and associated cloud services. for example below from Safaricom

http://www.safaricom.co.ke/business/cloud-computing/data-centre-as-a-service

http://www.safaricom.co.ke/business/cloud-computing/safaricom-backup-as-a-service

For imported cloud services, Am surprised by AWS email, can this be termed as "Imported Cloud Service". How would Tax Man collect VAT that i would pay AWS..? which is US company and not  within Kenyan Regulations, Could this open another channel for Tax Man loosing Tax 

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On Wed, Apr 8, 2015 at 12:49 PM, Sammy Njoroge via skunkworks <skunkworks@lists.my.co.ke> wrote:

Does this mean you'd be billed VAT inclusive for your web hosting, Angani, dropbox, google apps & cloud.....

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Dear AWS Customer,

Due to changes in Kenyan value added tax (“VAT”) legislation, sales of electronically supplied services to non-business customers located in Kenya may be subject to VAT.

If you qualify as a business customer and would like to ensure that you are not charged VAT on AWS offerings, please respond to this email with your account number and your company’s valid Kenyan Personal Identification Number.

Sincerely,
Amazon Web Services

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