A coalition of organizations representing over 8,000 members of Kenya’s creative industry submitted a memorandum to the National Assembly on Thursday, June 6, 2024, voicing strong opposition to several provisions in the proposed Finance Bill 2024.
The coalition argues that the bill, if enacted, would severely hamper the growth and opportunities within their sector, which encompasses film, performing arts, content creation, music, visual art, literature, and sports.
In their detailed submission, the coalition highlighted specific proposals that they believe would negatively impact the creative industry, which contributes 5% to Kenya’s GDP and plays a significant role in job creation and enhancing the nation’s cultural life.
The areas are:
Excise Duty on airtime, data
The coalition is particularly concerned about the proposed increase in excise duty on airtime and data.
“This measure would stifle the growth of the digital economy and negatively impact creative businesses,” the memorandum states.
The coalition explains that musicians using the Skiza platform, which relies on airtime transactions, would see reduced revenue due to higher taxes. They recommend waiving VAT and excise duty on airtime, internet, and data, arguing that these are not value-added products.
Eco levy on creative equipment
The memorandum also criticizes the proposed eco levy on essential creative equipment, including video cameras, SD cards, CDs, microphones, and broadcasting tools.
“This would escalate the cost of doing business by increasing input costs,” the coalition warns, adding that such a levy would hinder the growth and development of the sector.
Withholding tax relief
Another point of contention is the proposal to remove the Ksh24,000 per month relief from withholding tax.
The coalition contends that this change would negatively affect smaller and younger creators by limiting their ability to reinvest in their craft.
They propose increasing this relief limit to Ksh49,999 to better support emerging talent.
SEP Tax on digital services
Perhaps the most contentious proposal is the replacement of the 1.5% Digital Service Tax with a SEP Tax at 20% of gross turnover.
“This proposal would complicate business operations and position Kenya as a less attractive market globally,” the coalition argues.
They fear that global platforms operating in Kenya would reduce their investment in Kenyan content, leading to job losses. Instead, they recommend a flat tax rate of 6% on profits and the removal of VAT on payments to these platforms.
In conclusion, the coalition urges the National Assembly to reject the proposals they believe would harm the creative industry’s growth and sustainability.
“The creative sector is a vital part of our economy and cultural heritage, and it is crucial to foster an environment where it can thrive,” the memorandum asserts.
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