Reduce withholding tax on advertising and marketing services: A call for fairness and growth
The current financial bill in operation increased the withholding income tax from 2 percent for 5 percent on Management fees, professional fees, training fees and contractual fees on all companies in the Republic of Kenya.
The Advertising sector has been badly affected by this increase mainly due to the fact that on average Advertising companies make a 10 percent profit margin on revenues, thus making the 5 percent and advance 50 percent corporate tax rate.
The result of this has been a major contraction in Advertising companies cash flows with the attendant delays in payments in the entire marketing sector, wage freezes, layoffs, and reduced investment into innovation and expansion. The ripple effect of this can be seen in the flagging performance of our local media houses.