Tanzania to impose 5 percent tax on digital content creators

Dar es Salaam. The Government of Tanzania is set to implement a new taxation policy requiring digital content creators to pay three to five percent income tax aimed at increasing the subsector's contribution to the country's economy.

The new taxation decision was announced Thursday on June 13, 2024 in Parliament by the Finance Minister, Dr Mwigulu Nchemba, when tabling a Sh49.35 trillion budget for the 2024/25 fiscal year.

Tabling the budget, Dr Nchemba said the government proposed measures to be imposed on digital content creators including a five percent withholding tax on income for resident players.

He clarified that the tax will apply to income earned by resident business entities engaged in digital content creation, noting that the move is aimed at broadening the tax base and ensuring equitable taxation.

Regarding the five percent withholding tax on payments from foreign residents, Dr Nchemba said, “Payments made to Tanzanian digital content creators by foreign residents will also be subject to a three percent withholding tax.”

This also includes a three percent withholding tax on digital asset transactions whereas income derived from the transfer or exchange of digital assets will be taxed at a rate of three percent.

“The government anticipates that these measures will generate approximately Sh1.64 billion in annual revenue,” said Dr Nchemba.

“This initiative is part of a broader strategy to enhance tax collection and ensure that digital content creators contribute fairly to the national revenue,” he added.

Reached after the announcement, a digital content creator, Mr Baraka Mafole, said content creators do not see a problem with the government’s taxation decision, noting however that the government’s failure to support the creative industry remains a challenge.

“Other countries, like Nigeria and Kenya, have successfully enabled their creators to earn some income from TikTok and YouTube enabling mutual beneficiation both to the government and content creators,” he said.

A Dar es Salaam-based digital media content creator, Mr Aliy Zaid alias Upuju, commented, “Some payment platforms are not allowed in Tanzania hence denying content creators a significant amount of revenues.

“Digital content creators are struggling on their own, but we only see the government when it comes to taxes. They should combine two, taxation and improving the working environment among digital content creators,”

Tech & Media Convergency (TMC)’s chief executive officer, Ms Asha Abinallah, said there are the pros and cons of acknowledging digital content creation as a source of tax revenue.

She said the pros to creators are encouraging formalisation of their operations, formal contribution to the digital economy, and exploring further digital markets.

“The cons are that if not carefully executed, the government will create a delicate suffocating environment to small and emerging digital content creators who might find the additional tax burden financially straining, potentially stifling innovation and their growth,” she said.

Further, Ms Abinallah said the government has truly embraced that there are “digital content creators” as a source of revenue, suggesting that they should be empowered to trade with intentional care.

According to her, there is a need to support mechanisms and a thriving operating environment that favours the group to amplify the digital economy positively in the national revenue framework.

 “Such intentional approaches will help balance taxation for small or emerging creators, nurturing them in growth as opposed to stagnation or folding up,” she suggested.