Gov't Targets Internet Providers With HUGE Tax In The New Bill

Gov’t Targets Internet Providers With HUGE Tax In The New Bill

Kenyans who run social media and internet businesses, as well as social media content makers, could soon face a 15% tax under new recommendations.

National Assembly Clerk Samuel Njoroge’s draft proposal, published in one of the local dailies, reveals key tax amendment laws from the National Treasury aimed at increasing social media and phone usage while reducing communication service costs.

The Tax Laws (Amendment) Bill, 2024, sponsored by Majority Leader Kimani Ichung’wah, raises the exercise duty fees charged on social media and internet services by 15 percent.

If the plan is passed by Parliament, a 15% tax will be levied on all costs made to consumers for using the internet or social media services.

Under the current proposal, telecommunications businesses that supply internet services are likely to face higher operational costs.

The Kenya Revenue Authority has responded to my question on Sec7 of the Tax Laws (Amendment) Bill 2024 regarding Affordable Housing Levy contributions as allowable deductions.

The Authority argues there's no drafting clean up needed, those who contribute under 4 (2,b) of the… https://t.co/XhlrSaF6yF pic.twitter.com/Vb95pTAOap
— Julians Amboko (@AmbokoJH) November 14, 2024

These businesses may pass on the levy to customers, resulting in higher data and internet package rates, which may limit access and affordability for many users.

Internet service providers, both residential and commercial, may boost subscription costs to reflect the additional cost.

The digital advertising and e-commerce sectors may potentially see big changes.

As social media sites may raise advertising rates to cover the tax, digital marketing agencies, advertisers, and online retailers will bear the brunt of these costs.

SMEs, freelancers, and influencers who rely on social media for client engagement, brand awareness, and sales may see their reach shrink due to rising advertising expenses.

The Bill also includes a proposal to cut the exercise duty levied on telephone and broadband services from 15% to 12%.

If this is enacted by lawmakers, the cost of mobile usage services may fall marginally, allowing Kenyans to access connected charges at reasonable pricing.

In the Finance Act 2023, the government was given the permission to cut the amount of exercise duty levied on telephone and internet usage services, reducing the duty from 20 to 15 percent.

A further 3% reduction would mean that the costs could fall.

The Bill would also allow for lower costs for voice calls, messaging, and internet access, despite the fact that Kenyans continue to pay hefty service fees.

The government has already been under pressure to decrease some of the costs associated with mobile communication.

The East African Community (EAC) Technical Committee on Communications recommended in October of this year that data roaming rates be capped at 65 cents per megabyte.

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Roaming refers to a mobile phone user’s ability to use their device for calls, texts, and internet access while outside of their home network’s coverage region.

This usually occurs when you travel to another nation and your mobile service provider allows you to connect to the local network in the destination country.

If the EAC’s plan is adopted, Kenyans who make phone calls back to Kenya from nearby countries such as Uganda and Tanzania will pay lower rates.

Parliament already issued information on Thursday inviting the public to submit feedback on the Treasury’s ideas and bill contents.

Gov’t Targets Internet Providers With HUGE Tax In The New Bill

Tags: National Treasury