As I walk along Wabera Street on Wednesday morning, young Kenyans with cameras, lights, and photography reflectors line up, each calling me for a shoot.
I decline to take the shots and instead engage them in a discussion on the new changes in the Finance Bill 2025 that will likely impact their ventures.
Kenya's digital economy has witnessed exponential growth, with content creation becoming a viable source of income for many, particularly the youth.
Kenya’s creative industry has been rapidly expanding, with young innovators turning to platforms like TikTok monetisation, podcasting, and affiliate marketing to earn a living.
In an effort to tap into these growing digital spaces for taxes, in 2023 the government imposed a three per cent digital asset tax that, instead of being borne by multinationals plying their trade in the online spaces, was passed onto the content creators.
The duty targets individuals and companies dealing in cryptocurrencies and non-fungible tokens (NFTs), data, images, videos and written content.
Since its introduction, the digital tax—levied on income earned through online platforms—has been a point of contention among Kenyan creators.
Many argued that the 3 per cent rate, combined with other taxes and platform fees, significantly reduced their earnings.
The digital tax applies to revenues earned on digital or social media platforms. This includes content creators who earn income through digital spaces, platforms, and online marketplaces operating in the country.
However, in a move set to boost Kenya’s growing digital economy, the government has proposed slashing the digital services tax from 3 per cent to 1.5 per cent in the Finance Bill 2025.
According to proponents of the legislation, this reduction is expected to provide much-needed relief to content creators, influencers, and online entrepreneurs who rely on platforms like YouTube, TikTok, Instagram, and Facebook for income.
“How some players will benefit from this is we have proposed to reduce the digital asset tax from 3 per cent to 1.5 per cent. And that is a direct benefit to those operating in the digital environment,” said the National Treasury director general for budget, fiscal and economic affairs, Albert Mwenda.
The director general argues that the tax reduction aligns with the government's broader strategy to stimulate the digital sector, recognizing its potential for job creation and economic diversification.
The head of presidential special projects & creative economy, Denis Itumbi, said that this year the government is amending the digital tax, which affected the creators directly.
“So now the threshold has been removed for Sh5 million. That is for Facebook, Twitter, Google, and what they did; they passed that to the creators and the people doing advertisements online. Now, without the threshold, there's nothing to pass on to creators. So it's important to identify that it is a win for digital creators,” Itumbi told the Star.
At the junction of Wabera Street and Mama Ngina, we meet Sharon Mwende, a Nairobi-based YouTuber and TikToker who expresses optimism that the reduction will change her fortunes.
She points out that the initial imposition of higher taxes on digital services failed to consider the unique challenges faced by digital entrepreneurs, such as high production costs and inconsistent income streams.
While the tax reduction is a positive development, content creators say there is a need for continued dialogue with the government to ensure that policies remain supportive and reflective of the industry's realities.
They advocate for comprehensive frameworks that address taxation and provide support in areas like digital literacy, infrastructure development, and access to funding.
"On the digital taxes, it's a no on my side because the government is yet to support the youths enough to start taxing them. The government should provide jobs for youths and offer more than just taxes for content creators," said Francis Kuteto, proprietor behind King's Art Photography in Nairobi CBD.
The reduction of the levy is part of measures to align it with the 1.5 percent turnover tax levied on businesspeople whose gross turnover is between KES1 million and KES25 million a year. The Digital Asset Tax also targets small businesses, just like the Turnover Tax.
"The argument from players in the digital space has been that they are largely small business people, hence the need for uniformity. Also, to enhance compliance, which in turn enhances revenue collection," said National Treasury CS John Mbadi.
The government has been pushing for measures to regulate the sector by introducing proposals requiring cryptocurrency firms operating in the country to set up local offices and appoint directors subject to approval by a regulatory body such as the Capital Markets Authority (CMA).
