Digital Taxation Explained: What It Means for Kenyan Content Creators

The government of Kenya has recently introduced the proposed 2024 financial bill which proposes several administrative measures on income tax that include digital content monetization. This adds to the 2021 Digital Service Tax  (DST) which has brought new challenges and considerations for Kenyan content creators including V-loggers, Bloggers, and influencers.

Kenya’s Digital Service Tax imposes a 1.5% tax on the gross transaction value of services provided via digital platforms. This tax applies to a wide range of digital services, including streaming services, online marketplaces, and content monetization through platforms such as YouTube, Instagram, and other social media.

Basically, the primary goal of the DST is to ensure that the digital economy, which has traditionally been difficult to tax, contributes to national revenue. Recently, digital transactions have been on the increase and soon, they will  replace traditional business models, governments worldwide are implementing similar measures to tax the income generated within their jurisdictions.

For Kenyan content creators, the DST will directly impact  their earnings such that tax is levied on the revenue generated through digital platforms they operate on such as:

  • Advertising revenue: Income earned through platforms like YouTube’s AdSense.
  • Sponsored content: Payments received from brands for promotional posts or videos.
  • Subscription fees: Earnings from platforms like Patreon or YouTube memberships.
  • Digital sales: Revenue from selling digital products such as e-books, courses, or merchandise.

Simply,  if a YouTuber earning Ksh 100,000 from your channel, a 1.5% DST would amount to Ksh 1,500, reducing your net earnings. While this percentage might seem small, it adds up over time and can significantly impact the profitability of smaller or emerging content creators who are just starting to monetize their content.

Beyond the financial cost, the DST introduces new administrative burdens to content creators. For example, now, you need to KRA PIN for your digital services, submit regular returns detailing your digital earnings and keep comprehensive records of all transactions for tax compliance. These requirements can be daunting for content creators, especially those who operate as individuals or small businesses without extensive accounting support. The time and effort needed to comply with tax regulations can divert attention from content creation, potentially stifling creativity and growth.

Kenyan content creators might find themselves at a disadvantage compared to their international peers who do not face similar taxes. These additional costs are likely to make Kenyan creators less competitive. Brands and advertisers might prefer working with creators in regions with fewer tax obligations, potentially limiting opportunities for Kenyan influencers and digital entrepreneurs.

On the flip side, the DST could drive the formalization of the content creation sector in Kenya. By requiring content creators to comply with tax regulations. The government is pushing for a more structured and professional approach to digital entrepreneurship. This formalization can have long-term benefits, such as better access to financial services, business support resources, and a clearer understanding of the economic contributions of the digital sector.

The revenue generated from the DST is intended to fund public services and infrastructure projects. Improved public infrastructure, including better internet connectivity and digital tools. Ultimately, this indirectly benefits content creators by enhancing their ability to produce and distribute content. Additionally, government programs aimed at fostering digital literacy and entrepreneurship can provide valuable support to the content creation community.