Tax on digital content creators in Kenya retained at 5%

Content creators in Kenya will now be required to pay a 5% per cent withholding tax after President William Ruto signed the controversial Finance Bill into law. 

The bill had initially proposed a 15% tax on income earned through digital content monetisation. This was significantly higher than the 5% rate content creators currently pay.  This has now been retained. 

Local content creators protested the tax proposal, saying it was unfair and would amount to double taxation forcing the president to order for a review of the proposal.

Why double taxation? In 2021, then President Uhuru Kenyatta gave the green light to the Value Added Tax (Digital Marketplace Supply) Regulations, 2020 draft. The law defined “digital marketplace supply” as any supply of a service made over a platform that enables the direct interaction between buyers and sellers of services through electronic means. It has a wide scoop of taxable services from downloadable digital content to subscription-based media.

The Kenya Revenue Authority (KRA) even formed a particular unit that will oversee tax collection from digital companies. The unit ensures digital marketplace players pay taxes as the taxman finds more ways to meet his tax expectations.

The new bill has expanded the scope of digital content monetization to include payment gained from Advertisements on websites, social media platforms, and other outlets, brand sponsorships, and affiliate marketing. Others include subscription services where the audience pays a regular fee to view the content, crowdfunding for a creator and membership programs.

“A person who is required to deduct the digital asset tax shall, within twenty-four hours after making the deduction, remit the amount so deducted to the Commissioner together with a return of the amount of the payment, the amount of tax deducted, and such other information as the Commissioner may require,” the proposed the Finance Bill reads.