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The Treasury Cabinet Secretary John Mbadi has clarified that the proposed 15% tax on social media and internet services is aimed at the owners of these platforms, not local users.
In his defense of the tax, Mbadi argued that it is illogical for Kenyans to pay taxes for using social media while the owners of these platforms are exempt.
He further explained that these foreign companies benefit from infrastructure funded by the government, making it unfair that only local users are taxed. “People often praise the creativity of our people, which is true. They are using platforms owned by others. Why should we tax Kenyans who use the platform but not the platform owners?” Mbadi questioned.
Appearing before Parliament, Mbadi dismissed claims that the government is “raiding” social media to boost its revenue. “What we’re saying is that if you’re doing business in Kenya, even if you’re based abroad, you should contribute to the economy,” he emphasized.
The Tax Laws (Amendment) Bill, 2024, introduced by Majority Leader Kimani Ichung’wah, is currently before the National Assembly. If passed, it would apply a tax to any fees users pay for internet or social media services.
There are concerns among Kenyans, particularly social media users, that this tax, which is aimed at service providers, could result in higher data and internet bundle costs being passed on to consumers.
The proposed amendment to the Income Tax Act would introduce a new tax for non-resident companies with significant economic presence in Kenya through digital services. The tax would apply to services provided by these companies to users located in Kenya.
However, the tax would not apply to non-residents providing digital services to airlines where the government holds at least a 45% stake.
In an effort to reduce communication costs, the Bill also proposes lowering the excise duty on telephone and data services from 15% to 12%.
Mbadi also pointed out that multinational companies benefiting from internet infrastructure funded by Kenyan taxpayers are currently paying much lower taxes than local businesses. “These multinational corporations, with annual turnovers exceeding Sh100 billion, pay less than 15% tax, while Kenyan companies are paying up to 30% corporate tax,” he noted.
