Treasury Cabinet Secretary John Mbadi has announced that the digital tax will be reduced from 3 percent to 1.5 percent.
Speaking on Tuesday, May 6, during a town hall session at Daystar University, Mbadi explained that the move to reduce the digital tax aims to align it with the turnover tax, which targets small business owners.
“The digital tax is being reduced from 3 percent to 1.5 percent. This is informed by two reasons, one is that we have turnover tax, which is also for small business people, and was reduced to 1.5 percent.
"The argument from players in the digital space has been that they are also small business people, hence we needed that uniformity and we have reduced the digital tax in line with the turnover tax,” said CS Mbadi.
Mbadi also explained that reducing the digital tax would enhance compliance, and hence the government would collect more revenue from digital creators.
Read More
“Experience has shown that when you have a lower tax rate, especially on consumption taxes, you raise even more revenue.
"We believe that with the digital asset tax coming down to 1.5 percent, we are likely to collect more taxes,” Mbadi added.
The digital tax applies to revenues earned on digital or social media platforms. This includes content creators who earn income through digital spaces, platforms, and online marketplaces operating in the country.
The tax was introduced by the government to ensure digital businesses contribute to the country’s revenue.
