In December 2024, Kenya introduced the significant economic presence (SEP) tax and the minimum top-up tax under the Tax Laws Amendment Act to align with global tax standards, prevent profit shifting and tax base erosion.
These measures aim at ensuring that multinational corporations generating revenue in Kenya contribute to the local tax base, even without a physical presence. The move was considered crucial for Kenya given the rising digital economy, e-commerce, and cross-border services that have proved hard to tax.
However, US President Donald Trump's pronouncements against extra-territorial tax rules cast doubt on these measures in Kenya.
Mr Trump views these international tax rules as unfairly targeting US companies and has threatened retaliatory measures that are raising questions about the sustainability of Kenya's new tax policies.
The SEP tax replaces the previous digital service tax of 1.5 percent of gross transaction turnover with a new rate of three percent targeting non-resident companies deriving income from Kenya via digital marketplaces.
The minimum top-up tax applies to entities that are part of a multinational group with a consolidated annual turnover of €750 million (Sh101.5 billion) or more, ensuring such entities pay a minimum tax rate of 15 percent on their net income.
While Treasury is expected to introduce detailed regulations for the minimum top-up tax, the uncertainty surrounding Mr Trump’s policies may affect the implementation of these measures.
Trump's stance against the Organisation for Economic Co-operation and Development’s (OECD) Pillar 1 and 2 frameworks, designed to address digital economy taxation, could significantly impact Kenya, which relied on these frameworks to adopt the SEP and minimum top-up tax measures.
On his first day back in office, President Trump signed executive orders, including a memorandum declaring that the OECD Global Tax Deal, supported by Joe Biden’s administration, would have no force unless approved by Congress. This move is intended to protect the US’s ability to enact tax policies beneficial to American businesses and workers.
This strategy to protect America’s economic interests could have far-reaching consequences for countries like Kenya. If the US implements retaliatory measures in response to discrepancies between Kenya’s tax policies and America’s interests, the potential impact on Kenya's economy cannot be understated.
These measures might create economic tension, discourage multinational corporations from operating in Kenya, and consequently undermine Kenya's efforts to generate additional revenue and tackle tax avoidance.
The recent US withdrawal from the UN tax negotiations further complicates the situation. Other potential consequences include disruptions to Kenya's trade benefits under the African Growth and Opportunity Act, which grants duty-free access to US markets for Kenyan exports.
Ongoing negotiations under the US-Kenya Strategic Trade and Investment Partnership could also be at risk if Kenya’s tax policies are viewed as misaligned with US interests. These factors highlight the importance of Kenya carefully navigating its tax policies to preserve favourable trade relations with the United States.
Mr Trump's stance places many countries in a catch-22 situation, facing a dilemma of pursuing necessary revenue generation through measures like the SEP and minimum top-up taxes or adjusting their policies in response to the US stance. Kenya, like many others, will require a careful balance between pursuing additional tax revenue and maintaining good relations with the US.
Given these potential challenges, it is plausible that the imminent Finance Bill 2025 includes amendments to address the situation. The Kenyan government may consider revising the SEP and minimum top-up tax provisions to maintain its fiscal objectives while considering international concerns and developments. This could involve introducing more flexible tax rules or providing exemptions for certain multinational corporations.
Additionally, government may incorporate this issue into ongoing discussions under the STIP framework or initiate diplomatic discussions with the US to secure a mutually beneficial resolution.
Should these efforts not succeed, Kenya could lobby for international backing to counter the US’s aggressive stance on extraterritorial tax rules. While challenging, Kenya's position as a developing country might garner sympathy and support, and international solidarity could provide the leverage needed to influence the outcome.
As the situation evolves, Kenya's path forward will require careful navigation of domestic priorities and international pressures.
African film audiences can look forward to a rapid transformation of their favourite medium over the next year, as moviemaking evolves into a digitally enabled and socially engaged art form while remaining as entertaining as ever.
Certain clear movie trends are emerging that will boost efficiencies, grow audiences, and redefine what is possible in the world of filmmaking. These trends will benefit almost everyone who is involved in filmmaking – filmmakers, crew, content platforms, fans, and ultimately the audiences who get to enjoy the movies.
Artificial intelligence and machine learning offer many opportunities to improve the filmmaking process. Many viewers are familiar with AI-generated video imagery. This will continue to grow, especially in the area of special effects, or for creating environments.
However, viewers still react to the human engagement of real actors, so characters will likely continue to be portrayed by real humans.
Much of the contribution of AI will also come in the area of screenplay analysis, helping to create more impactful, entertaining scripts. AI can also improve production scheduling, and help generate mood boards and storyboards during the early production stages. It can also be used to stimulate the brainstorming process, and eventually to automate the editing phase.
These applications are time-savers and efficiency boosters that will help emerging filmmakers make films more easily and help bring more voices into the sector.
The real game-changer, for the film and audiovisual industry, and which is expected to continue, especially in Africa, is the ongoing digital revolution, which started some 20 years ago and was accelerated by the Covid-19 pandemic. The arrival of new, affordable and light-weight digital film equipment on the continent has ushered in a new era of filmmaking.
Young Africans are suddenly able to access production resources for audiovisual content. Digital film technology has progressed so much that it has now become possible to shoot a cinema-quality video on a smartphone.
According to a 2021 UNESCO report, there are 816 million mobile SIM connections in Sub-Saharan Africa (77 percent penetration rate) and 712 million in the Middle East and North Africa (116 percent penetration rate). In several African countries, the digital economy is becoming one of the main drivers of growth, accounting for more than five percent of GDP.
The film and audio-visual industry in Africa has the potential to create over 20 million jobs and generate $20 billion in revenues per year, according to the same report.
Particularly when telling fantasy, sci-fi or spiritual stories, it is useful to be able to create immersive, virtual film sets that place characters in an otherworldly environment. New technology employs entire walls consisting of tiny LED lights, which means almost any environment can be created digitally.
Another useful technology is real-time rendering, a type of computer graphics that analyses and produces images in real-time. When combined with technologies such as LED walls, real-time 3D rendering allows actors to interact with the render as it is developed. This opens up a world of creative possibilities for filmmakers.
This trend has long been part of the African film tradition. Homegrown film platforms draw audiences of millions, who respond passionately to authentic, hyperlocal stories that they can relate to. These might be dramas that reflect real-world community dynamics, thrillers that evoke real human fears, or cultural practices that are part of viewers’ everyday lives.
Globally, audiences are also coming to demand more diverse and authentic representation in content and filmmaking. This is likely to create opportunities for African filmmakers and African films, as content from the continent reflects rich human experiences that are sure to appeal to wider audiences.
Carbon emissions are a major international concern, as the reality of climate change becomes more obvious. Filmmaking has its own part to play in working to minimise emissions through its operations.
One of the most effective ways to achieve more sustainable filmmaking is by minimising transport and logistics operations. That can be achieved by sourcing cast, crew, and support services from local communities where movies are filmed. Developing skilled African film professionals is therefore the most effective way to achieve sustainable filmmaking on the continent.
This process is well underway, through institutions like the MTF Academies – in Lagos, Nairobi and Lusaka – which develop TV and film talent through fully-funded, accredited training programmes.
Today, half the fun of enjoying a film, a show or a series is in engaging with fellow fans. Social media allows communities to spring up rapidly.
Viewers can enjoy a film on a TV or streaming platform, while sharing the experience with others, in real-time. In the digital age, these communities add an extra dimension to the experience.
For filmmakers, producers and content platforms, these communities are also now a vital part of the movie-marketing process. Films exist on the content platform – TV, theatre, or online – but they also exist as brands and cultural phenomena, complete with their own influencers, trends and sub-trends. Producers produce the show, but if it’s successful, eventually the movie becomes the property of its community – and part of the culture!
These trends will continue reshaping the film industry, but also the experience of film. While it is difficult to predict exactly what films will look like in the future, it is inevitable that the best films will be richer, more easily – but more elegantly – produced, making a bigger social impact.
The writers are Advocates of the High Court of Kenya
