Meta announces 5 percent tax withholding on payments to Kenyan creators

Meta has recently declared a new tax policy, which will have great impact on Kenyan content creators who monetize their content on its services, such as Facebook and Instagram.

The tech giant announced in a notice on Thursday, November 20, that it will now withhold a 5 percent withholding tax on payments it would make to creators in Kenya, which Meta will deduct and send straight to the Kenya Revenue Authority (KRA).

Meta attributes the change to the changes in the tax laws of Kenya, which mandate that all enterprises paying money to local creators deduct taxes and remit them to the country's revenue collection body.

The company declared in its notice that starting 1 Jan 2025, the Kenya Tax law will require all businesses to deduct and remit taxes to the Kenya Revenue Authority (KRA) on any payments made to creators based in Kenya.

Both creators and creators will therefore not earn all their gross income through Meta. Rather, the company will retain 5 percent of any payouts as tax, and creators will just get the net. Meta also added that these deductions would start being effective in December 2025.

Starting in December 2025, any payments would be subject to a 5 percent creator withholding tax (along with other applicable withholding taxes) and the after-tax amount would be transferred to you, the company clarified. To provide transparency, Meta gave creators a promise that they will be in a position to trace all withheld amounts in the official company-issued records.

Besides this, KRA will create tax deduction certificates via the government portal, where creators can check the sums paid on their behalf.

Notice also focused on the fact that the deductions will be well represented in the statements of remittance that will be made accessible to creators. This announcement is made at a moment when the digital economy in Kenya is actively growing, and millions of young creators are increasingly turning to social media as their source of income by advertising, creating partnerships, and monetizing content.

Although withholding tax is consistent with larger governmental initiatives to raise tax compliance within the digital industry, new financial implications appear on creators who are likely to be already experiencing volatile income streams.

Meanwhile, the formation comes at a time when the Kenyan government was under scrutiny for having had relations with Meta on information access. The government, as it is said in the report of the Transparency Center of Meta, issued 23 demands of user information in the first half of the year 2024, i.e. January to June.

Of these, 19 were legal process requests with three being emergency disclosure requests, which are generally established in emergency cases like kidnappings or life-threatening cases.

At this time, the requests were directed to 37 user accounts, and Meta approved around 43.5 percent.

The company observed that it screens all government requests thoroughly to make sure that their requests adhere to the legal provisions and to safeguard the privacy of the users.

Meta complies with government demands of data under the stipulated law and under our terms of service. All our requests are carefully scrutinized to meet legal sufficiency and we can decline or demand more specificity on those requests that seem excessively broad or vague, as per the report.

Second half of the year data, which includes July to December 2024, indicated that government inquiries had decreased.

Twelve requests were reported to 18 accounts. The nine requests were about the legal procedures, whereas the other three were emergency requests. Nonetheless, only 33 percent of such submissions were respected by Meta, which implies a stricter stance on analyzing government requests to get access to the information about the users. Meta suggests that the kind of information shared will depend on what is required. The company can give minimum information about the subscribers in the form of names, email addresses, payment details or login IP addresses in certain instances.

In less broad legal proceedings, Meta can also publish reduced data of account activity, such as message headering as well as IP logs.

The company asserts that it is only involved in creating information that is needed to fulfill each request. The enforcement of a withholding tax, along with greater transparency concerning the government data requests, signifies the rising convergence between the digital economy, the tax policy, and privacy governance in Kenya.

With the implementation date of January 2025 drawing near, now creators are being strongly encouraged to also get to know the new tax requirements and get ready to adjust their earnings