Kenya-based content creators have faulted the William Ruto-led government’s plan to introduce a 15% withholding tax on income generated from digital content monetization. The proposal to tax content creators in Kenya is part of the many revisions intended for the Finance Bill. If approved by the nation’s legislature, any income obtained from the monetisation of a creator’s content will be subject to the 15% tax.
Although this move will help the East African country widen its tax base, it’s worth exploring the potential implications for those directly affected. The creator economy in Africa is booming with young individuals leveraging platforms like Instagram, YouTube, and TikTok to advertise products and get paid. Many brands have also signed some of the popular creators, turning them into influencers for products and services.
Interestingly, a Selar report found that 66.9% of digital content creators “hire one staff or more in the first six months of their journey.” Aside from offering jobs which translate into income, the creator market can give Africa’s economy a much-needed boost.
Popular comedian and content creator, Alex Mathenge said he does not have a problem with being taxed, however, the government hasn’t done anything for content creators to earn the right to demand taxes. “You cannot milk a cow which you’ve not given grass,” he said.
He went ahead to state that before the government moves to tax content creators, it must first build an environment that supports the efforts of those in the digital economy.
Another content creator, Mohammed Assad Alby – a TikTok star backed his colleague. According to him, quality jobs are difficult to find in Kenya which is why many youths have shifted to content creation because it offers an innovative way to make money. He however warned that making money in the industry isn’t easy
One thing people don’t know is that before we get to a point where we can earn money from content, we spend so much from our own pockets with a slim chance of making it in the competitive industry. Cameras, laptops, editing software, microphones, lighting, all this equipment is expensive in Kenya.Mohammed Alby
Alby took it a notch further to blame a section of their industry, especially those known to flood social media with photos of newly-bought luxurious cars and majestic homes for the reason why the government is casting its spotlight on the industry. He pointed out that such lifestyles may have contributed to the mindset that there’s plenty of money in the industry even though this isn’t so.
Another content generator, Kevin Maina believes the policy will further strain the market and possibly discourage other individuals from entering the field. “It is likely to affect the quality of work. Because higher taxes on the same income only strain your capacity to invest more in the craft,” he says.
What the new tax entails for content creators
The government’s desire to establish a 15% withholding tax on its content-creator market affirms the argument that Kenya’s digital economy has grown in recent years. According to recent findings, the number of people in the creator industry earning over 1 million Kenyan shillings increased by 60% within the past year.
The scope of digital content monetization, according to the bill, includes payment gained from:
- Advertisements on websites, social media platforms, and other outlets
- Brand sponsorships
- Affiliate marketing
- Subscription services where the audience pays a regular fee to view the content
- Crowdfunding for a creator
- Membership programs
The tax cuts across any channel or medium.
Read also: What does the new copyright law mean for Nigerian content creators?
The call for the formation of a union
While there is no registered group of content creators in Kenya, Alby believes it’s time one is formed. “We need to come together as content creators and form a body where we can express our complaints because we will be hit so hard and the same generation that used to laugh at online content and term it as ‘wasting time’ and not a ‘real job’ is now hunting for our little gains as we grow,” he proposes.
While tech jobs have come to stay, most of them still fall under the informal gig economy or as Alby put it, ‘not a real job‘. This absence of formality is why it is difficult for players to come under an umbrella association to form a government-approved union. This also used to mean gig jobs were non-taxable.
However, governments across Africa, most of them desperately in need of revenue, are finding ways to tax these new unregulated players in their economies. Because of the very nature of government, and because of the sheer informality of the space, these taxes can be quite extortionist and sometimes they can be multiples.
A god example is the proposed NITDA Bill in Nigeria which would automatically subject startups and ICT players to excessive and multiple taxation. This used to be the case in the country’s e-hailing space until the drivers fought and obtained a government-approved union through which they now fight for their welfare
Thus, as governments have continued to find a way to tax gig workers, it is only fair that they in turn find a way to unionise and fight back against some excesses which may include overtaxing, multiple taxing, outright ban on their activities and over regulation. The call for Kenyan content creators to band together might thus be an option worth exploiting.
It remains to be seen whether Mohammed Alby’s idea will prompt the rise of a union or not. One way they could get this done is to form an association to be affiliated to Kenya’s main labour union, the Central Organisation of Trade Unions (COTU). With this affiliation, they could approach the country’s Registrar of Trade Unions, under the Ministry of Labour, to register as a trade union.
Kenya’s government’s struggling with revenue generation
The reason why the government has turned its attention to the creator market is that it has struggled with revenue generation. Kenya’s recovery from the economic downturn influenced by the pandemic has been admirable, though slow. Despite the promise of an eventual financial comeback, Kenya still faces many challenges.
For the first time since independence in 1963, Kenya didn’t pay workers and public officeholders on time. This harsh condition prompted some civil servants to consider a strike while, in April, doctors in Nandi county announced a 7-day strike over delayed salary payments.
The country’s national treasury needs around $434 million to fulfill its monthly salary and pension obligations. It currently lacks that, and as such, reviewing its revenue generation model seemed like a fine decision.
In the end…
Taxing all of the average creator’s income streams will have positive and negative outcomes. While this decision may enable Kenya to increase its revenue which can then enable it to keep the salary train moving, it may create a harsh climate for creators.
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