Foreign firms that air their adverts in Kenya might be forced to produce them locally or pay a premium for the same, as the Information Communication Technology (ICT) Cabinet secretary proposes.
This is after the state has observed that adverts are being produced in the foreign markets and are brought in Kenya for airing but evading taxes.
ICT Cabinet secretary Joe Mucheru pointed out that most commercials are produced in outside markets which firms consider cheaper and affordable as compared to the local markets.
“Adverts are being done outside the country and they are brought in to Kenya in flash disks and these companies do not pay taxes. We have had discussions and we now need to start implementing airing tax for these adverts,” Mucheru said.
Locally produced commercials are highly charged as they are the sources of revenue for both the county and the national governments. This has driven many local firms to make commercials outside the country.
Jobs exports have increased and the Government revenue collection has reduced as a result of producing commercials in the foreign market.
“The firms who are producing the adverts locally, they are hiring people and paying taxes yet they are being penalized when people take all that money to other countries,” said the CS.
The ICT Cs called upon the Communications Authority of Kenya to start giving incentives to locally produced commercials and penalize or regulate the foreign-produced adverts.
Issuance of incentives would encourage local production and reduce foreign ads hence increasing job opportunities to the locals and relative revenue collection.
Local film producers also face serious challenges when it comes to regulations and taxations. They have to go to various regulators in order to be cleared for operations.
The Kenya films association proposed that film producers need tax credits and rebates to spur their developments since the industry has been starved off investments.
According to PwC Kenya, a professional firm focused on providing audit and assurance, advisory and tax services, the media and the entertainment industry currently has a net worth of approximately 200 billion shillings in 2019 and projected to improve by 100 billion shillings by 2022.