Media industry stare at Sh2b revenue loss on advertisement tax

TAXES:   The media industry eyes a possible Sh2 billion loss if a proposed 15 per cent excise duty on fees charged for the advertisement of betting, gaming, and alcohol-related activities is maintained for the second consecutive year.

The players, through the Media Owners Association (MOA) argue that the industry hugely relies on advertisement fees and the taxes could jolt its revenue further just when it is struggling to recover from the impact of the pandemic that significantly slashed the stream of ads.

Taxes on advertising excisable goods and services such as betting and alcohol was first effected in July 2022 to discourage their penetration and consumption but the MOA has warned that this will trigger further layoffs.

“These taxes will stifle the projected growth, leading to loss of employment or retrenchment of employees in advertising companies and media houses. There are clear instances of double taxation as the products (alcohol and betting) have already been subjected to excise duty,” MOA chair Agnes Kalekye told the Finance and National Planning Committee.

Local media houses have lately been trimming their workforce to remain afloat amid massive salary slashes and delays, with the print sector also reducing distribution reach.

Heavily taxed sector

The situation has equally been worsened by the digital disruption that has seen a decline in the consumption of traditional media, something that bares a considerable impact on the number of ads.

Regulation of media advertisement, the major source of revenue, is captured in the Kenya Information and Communication Act, which dictates the time of broadcasting certain products/ services, airing intervals, and the size of the ads.

Betting activities, alcohol, cigarettes, and jewellery are among the highly taxed products as the government tries to source extra revenues to seal the budget hole.