NAIROBI, Kenya May 29 – The Media Owners Association (MOA) has protested the proposed introduction of a 5 percent Withholding tax on sales promotions, marketing and advertising services.
In submissions to the Finance and National Planning Committee, MoA through its Chairman Agnes Kalekye of Radio Africa said media cashflow will significantly reduce if their customers withhold the 5 percent as proposed in the Finance Bill.
“The introduction of the withholding tax may lead to cash flow challenges for SMEs due to tied-up working capital. This may affect the contribution of such companies to the economy which goes against Kenya Kwanza,” Kalekye told the Kimani Kuria-led committee on Monday, the last day for public participation in the Finance Bill (2023) that has elicited mixed reactions from stakeholders and Kenyans in various sectors.
The Bill proposes to introduce a 5 percent WHT on payments made to resident persons who carry out sales promotions, marketing, and advertising services.
“Our biggest concern as the media industry is that a significant part of our income arises from such services and if all our customers withhold 5 percent of our income, a large amount of our cashflow would be tied down in advance taxes,” she said accompanied by members and officials of the association and tax consultants led by Philip Muema of Andersen.
With the media industry on the verge of collapsing due to dwindling advertisements, the Media Owners Association said its members are already faced with cashflow constraints due to the existing 2 percent Withholding tax.
“So an additional 5 percent WHT would cripple the industry,” Kalekye said.
She cited customers such as ordinary Kenyans who place obituaries in newspapers and other classified ads who will be burdened with navigating through with the new taxes hence leading to tax leakages.
“It costs between Sh350 and Sh2,000 to place a classified advertisement in a newspaper. Having this in mind, the imposition of the proposed tax on such low amounts seems quite exorbitant,” she said.
She implored the committee to consider deleting the proposal so as to enable the media industry to thrive.
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