Treasury Cabinet Secretary John Mbadi has announced a reduction in the digital tax from three percent to one-point-five percent.
Speaking on Tuesday, May 6, during a town hall meeting at Daystar University, Mbadi stated that the decision was aimed at aligning the digital tax with the turnover tax, which similarly targets small businesses.
“The digital tax is being reduced from three percent to one-point-five percent. This is informed by two reasons: one is that we have turnover tax, also for small business people, and it was reduced to one-point-five percent,” he explained.
According to the CS, stakeholders in the digital economy argued that many digital entrepreneurs fall under the small business category and should therefore be taxed at the same rate.
Mbadi noted that the reduction would also encourage compliance, leading to increased tax collection from digital creators and online businesses.
“Experience has shown that when you have a lower tax rate, especially on consumption taxes, you raise even more revenue,” he said. “We believe that with the digital tax coming down to one-point-five percent, we are likely to collect more taxes.”
The digital tax applies to income earned through digital platforms, including social media and online marketplaces. It was introduced to ensure that digital enterprises contribute their fair share to national revenue.
