NAIROBI, Kenya – The draft Finance Bill 2025, recently tabled in Parliament, proposes the introduction of a 16% Value Added Tax (VAT) on internet-based radio and television services, a move aimed at expanding Kenya’s digital tax net.
This proposal is part of the government’s ongoing efforts to widen the tax base and address fiscal challenges by tapping into the growing digital economy.
Under the draft Bill, Section 8 of the Value Added Tax Act would be amended to include internet broadcasting services as part of the electronic services that attract VAT.
The amendment seeks to replace the term “broadcast television” with “internet radio or television broadcasting services,” ensuring that digital content streaming platforms are captured within the VAT framework.
Currently, the VAT Act defines “electronic services” to include services delivered through telecommunications networks, such as websites, software updates, and various digital broadcasts, including traditional broadcast television.
The proposed amendment shifts the focus to internet-based platforms, which are increasingly popular among Kenya’s youth due to their flexibility and wide variety of content.
Should the amendment be approved, consumers of online radio and television services will likely face higher subscription fees as service providers adjust prices to account for the additional tax burden.
This tax change reflects the growing importance of internet media consumption, particularly among young people in Kenya, where internet penetration and digital content consumption have seen remarkable growth.
According to a recent report by UK-based research firm GWI, Kenya ranks fourth globally in digital content purchases, with 76.5% of Kenyans aged 16 and above paying for digital content each month.
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Only Norway, Mexico, and Sweden reported higher consumption rates, underscoring the country’s vibrant and expanding digital economy.
The Communications Authority of Kenya (CA) has also noted that internet-based platforms are increasingly curating content targeted at teenagers, focusing on themes relevant to their interests and concerns, further highlighting the rise of digital media over traditional broadcast TV.
In addition to the 16% VAT on digital media services, non-resident providers of digital services are already subject to a Significant Economic Presence (SEP) tax—formerly the Digital Services Tax—which was introduced under the Tax Laws (Amendment) Act, 2024.
This tax, set at 3% of gross turnover, is payable monthly and targets global digital platforms operating in Kenya.
The digital taxation measures are part of the government’s broader strategy to enhance revenue collection by capitalizing on the growing digital economy.
As more services shift online, the government sees an opportunity to harness additional funds to address fiscal deficits.
If the Finance Bill 2025 is passed before the start of the new financial year on July 1, 2025, the proposed changes to the VAT structure will take effect immediately.
The government expects the new tax measures to significantly bolster revenue collection while ensuring that the digital economy contributes more equitably to national fiscal needs.
