Media to feel pinch of 15pc tax on adverts
After grappling with Covid-triggered shrinking revenues for almost two years, the media industry is set to suffer yet another jolt after the government imposed a 15 per cent excise tax on fees charged for the advertisement of betting, gaming, and alcohol-related activities.
National Treasury said the proposal is set to tame the promotion of gambling and drinking in the country, further helping it raise Sh50.4 billion in new taxes to fund the budget starting July 1, 2022.
“To discourage the promotion of these products and activities, I propose to introduce an excise duty of 15 per cent on fees charged by all television stations, print media, billboards, and radio stations for advertisements of these activities,” Ukur Yatani said in the 2022/23 budget statement. The new “sin” tax under the Excise Duty Act is set to dent the revenue of media houses owing to the rise of digital platforms and brands slashing media spending.
However, the imposition of the new excise duty is likely to collide with proposed Nairobi County betting legislation, thus exacerbating the existing wrangles between the national government and Nairobi County government over control of the betting sector in a move anticipated to deny Kenya Revenue Authority (KRA) billions of taxes. A Bill by City Hall is seeking to limit advertising and gaming time within Nairobi - a move that is likely to be a big blow to the country’s revenue collection if implemented, considering that a big number of gaming occurs in the city.
The Bill, which has sailed through second reading, will also suspend USSD codes used in gaming activities by radio stations. The government body, Betting Control and Licencing Board (BCLB) is, however, upbeat of minimal wrangles if City Hall ceases overlapping its roles.
“A county law cannot contradict a national law. Their (county) responsibility in terms of gaming is well stipulated. We are not in a war with anybody. But the problem is if the county wants to do what is not under their mandate,” BLCB chairman Peter Mbugi told Business Hub.
