Television and radio streaming face a 16 percent value added tax (VAT) as the government seeks to widen the tax base by tapping into the growing popularity of internet uptake.
The proposal is contained in the Finance Bill, 2025, which seeks to broaden the range of electronic services that pay the 16 percent VAT. The Bill was tabled in Parliament on Wednesday. It is expected to become law before July 1.
Other electronic services currently subject to the 16 percent VAT include websites, web hosting, remote maintenance of programmes and equipment, self-learning packages, music, films and software updates.
The proposed change to the VAT Act will allow the government to tap into the booming business of streaming television and radio, helping boost tax collections. It will, however, trigger an increase in the prices of the services, an extra cost that consumers using these services will shoulder.
“Section 8 of the Value Added Tax is amended in subsection (3) by deleting the words ‘broadcast television’ appearing in paragraph (g) and substituting thereof the words ‘internet radio or television broadcasting services’,” the Finance Bill, 2025 reads.
Internet-based television and radio have gained traction in recent years, particularly among younger age groups, who are increasingly utilising online platforms for news and entertainment, breaking away from the traditional broadcast services.
A report by GWI, a London-based audience research firm, shows that a higher percentage of Kenyans purchase digital content compared to other countries, highlighting the massive tax base that the government is targeting through the proposed changes to the VAT Act.
The report shows that 76.5 percent of Kenyans over the age of 16 pay for digital content every month. This is the fourth highest proportion in the world after Norway, Mexico and Sweden.
The growth of television and radio streaming, especially among the youth and middle class is also driven by the desire for flexibility and affordability, unlike the broadcast TV.
Communications Authority of Kenya (CA) — the regulator of the communications sector— recently stated that streaming television is producing more content that is specifically targeted at teenagers, addressing their interests and concerns.
The proposed 16 percent VAT charge on internet radio or television broadcasting services marks the latest onslaught on the booming digital services space.
Digital services, including television, that are offered by non-residents pay the significant economic presence (SEP) tax, which is levied at a rate of three percent of gross turnover.
SEP was formerly known as the digital services tax, but this was changed by the Tax Laws (Amendment) Act, 2024, which came into force in December last year.
The tax is payable on or before the 20th day of the month following the month in which the service was offered.
