Treasury Cabinet Secretary John Mbadi has responded to criticism surrounding the proposed 15% tax on social media and online businesses.
Appearing before the National Assembly’s Finance Committee on Thursday, November 14, Mbadi clarified that the new tax is aimed at multinational social media companies operating in Kenya, not local users.
“I’ve heard people talk about the social media space, saying ‘these people are just creative,’ which is true—our people are very creative. Why would we only tax Kenyans using these platforms while the platform owners pay nothing?” Mbadi questioned.
He explained that it is essential for these multinational firms to contribute through the new tax, as the Kenyan government has invested in infrastructure that supports their operations.
“When we make the proposal, people misunderstand it, thinking ‘the government is raiding social media space.’ This is far from the truth. We’re saying if you’re doing business here from abroad, you must leave part of the proceeds to support our economy because we’ve provided the infrastructure for you,” Mbadi stated.
“The internet connectivity you’re using was funded by Kenyan taxpayers. We must recover costs to maintain this infrastructure from the revenue you generate here.”
The Tax Laws (Amendment) Bill, 2024, sponsored by Kikuyu MP Kimani Ichung’wah, seeks to amend key tax statutes, including the Income Tax Act, Value Added Tax Act, and Excise Duty Act. The bill proposes adjustments to withholding tax rates for goods supplied to public entities and digital marketplace transactions.
Additionally, the bill suggests changes to VAT regulations, including the removal of thresholds for VAT apportionment, which will affect input tax deductions. It also proposes repealing certain reliefs, such as the Affordable Housing relief, to avoid double benefits.
