Treasury cabinet secretary John Mbadi has addressed the backlash arising from the proposed new 15% tax on social media and online businesses.
Appearing before the National Assembly's Finance Committee on Thursday, November 14, the CS said the new tax targets multinational social media companies operating in Kenya and not local users.
"I have heard people talk about social media space and then they say, 'these people are just creative' which is true, our people are very creative. People who are out there, having their platforms here; why would we just tax our Kenyans who are using that platform but the owners of the platforms are not paying anything," Mbadi said.
Mbadi explained that it was necessary for the multinational firms to support the new tax as the government has already laid infrastructure to ease their operations.
"And when you make the proposal people don't understand it quickly saying, 'government is raiding social media space', further from the truth. We are saying if you are doing business here and you are out there you must leave part of the proceeds here to benefit the economy because we have laid the infrastructure for you.
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"That internet connectivity that you are using, the Kenyan taxpayer has paid for it. So we must gain, how will we maintain that infrastructure if we don't get part of the money that you generate from here," Mbadi added.
The Tax Laws (Amendment) Bill, 2024, sponsored by Kikuyu MP Kimani Ichung'wah, aims to amend key tax statutes, including the Income Tax Act, Value Added Tax Act, and Excise Duty Act.
The bill includes adjustments to withholding tax rates for goods supplied to public entities and transactions in the digital marketplace.
There are also changes to VAT regulations, notably the removal of thresholds for VAT apportionment, which will impact input tax deductions.
Furthermore, the bill proposes the repeal of certain reliefs, including the Affordable Housing relief, to prevent double benefits.
