Ministry to penalise overseas ads

Multinational firms with local operations might in future have to produce their adverts locally or pay a premium to air them on the local channels. This is as the State considers penalising them for commercials shot in other markets and aired in Kenya.

Other than citing the need to take advantage of economies of scale when working with their sister companies in other markets and presenting a single advert that is aired across different countries, charges imposed on producing commercials locally is driven by various national and county government taxes.

This has resulted in little interest by many firms to make adverts in Kenya. The high cost has also driven local firms to make commercials in other markets.

ICT Cabinet Secretary Joe Mucheru said this has led to the export of jobs and tax revenues for the Government.

“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,” he said.

"The firms who are producing the adverts locally, they are hiring people and paying taxes yet they are being penalised when people take all that money to other countries."

He spoke Friday in Nairobi, where he challenged the Communications Authority of Kenya to evaluate modalities through which it can impose penalties to reduce foreign production of commercials and incentivise the creation of adverts locally.

Film producers have to go to various regulators to secure clearance. But the impediments seen in regulation and taxation are only part of the problem.

The industry has been starved off investments, according to the Kenya Film Commission, which has proposed tax credits and rebates to spur its development.

PwC estimates the media and entertainment industry to be worth Sh200 billion in 2019 and could go up to Sh300 billion in 2022.