CS Treasury John Mbadi has proposed a new 15% tax on social media and online businesses. If approved, this tax could lead to higher internet costs, impacting creators, online businesses, and everyday users in Kenya.
Recent proposals aim to expand the country’s tax base, suggesting that social media-based enterprises, internet entrepreneurs, and content producers could soon face a new tax of fifteen percent on their revenues.
The National Treasury has developed a proposal detailing major tax modifications to address the expenses associated with digital services. This step is part of the plan.
Introducing a 15% excise charge on internet and social media services is one of the provisions of the Tax Laws (Amendment) Bill 2024. If it were to become law, it would result in increased expenses for millions of people who use the internet in Kenya, which would impact content providers, small enterprises, and regular consumers.
This plan is the most recent stage in Treasury Commissar John Mbadi’s budgetary agenda, following a significant cabinet upheaval that occurred after public outrage resulted in the rejection of the Finance Bill 2024.
Currently, the government is reevaluating its revenue generation strategy, and the proposed fifteen percent tax on social media platforms is at the center of an ongoing dispute over the taxation of digital services in Kenya..
Currently, the Finance Act 2023 is responsible for managing Kenya’s taxes related to the digital economy. This act establishes guidelines on particular tax requirements for digital platforms and online content providers. Among the essential provisions were:
Tax on the Monetisation of Digital Content Content producers and influencers were required to pay a withholding tax of 5% on their revenues, with a rate of 20% for non-residents.
This particular tax applied to a broad variety of sources of revenue, such as ads, brand agreements, affiliate marketing, and payments by subscribers.
The Digital Asset Tax (DAT) is a system for taxing digital transactions that includes the imposition of a tax of three percent on the transfer and exchange of digital assets. These digital assets include cryptocurrencies, tokens, and non-fungible tokens (NFTs).
The purpose of these levies was to extend Kenya’s tax base and bring it in line with global norms for digital taxation.
This comes at a time when economies around the globe are struggling with the complexity of monetizing digital services.
On the other hand, the Finance Act 2023 has also caused content producers and small enterprises to express their worries over rising compliance expenses and decreased profit margins.
This is particularly relevant for organisations that operate with limited financial resources. Despite these challenges, it is evident that the Act has laid the groundwork for Kenya’s digital industry taxation strategy.
This has paved the way for future suggestions, such as the 15% tax on earnings from social media platforms.
