The Kenya Revenue Authority (KRA) has set its sights on royalties from copyrighted and patented creations in the latest bid to boost revenue collection.
The taxman is particularly targeting musicians, filmmakers, authors and other owners of patented works such as designs.
The law requires that promoters and societies which collect royalties on behalf of artistes withhold five percent tax of the pay received on behalf of the artistes and 20 percent for those abroad.
The tax agency is also seeking to grow collections from payment made for use of patented industrial, commercial or scientific equipment.
“Royalty means a payment as a consideration for the use of or the right to use the copyright of literary, artistic or scientific work,” KRA said last week in a notice inviting the players for a nationwide sensitisation forum.
This come on the backdrop of unending disputes between artistes and Collective Management Organisations (CMO) which collects and distributes royalties among authors, composers, performers, producers, among others.
Music Copyright Society of Kenya (MCSK), for example, came under fire in August after distributing a uniform Sh2,530 to its 13,967 members.
MCSK, which had its permit withdrawn in the past for mismanagement of funds collected, is among three CMOs licensed this year by the Kenya Copyright Board (Kecobo).
Others are Kenya Association of Music Producers (KAMP) and Performers Rights Society of Kenya (PRISK).
Mr Edward Sigei, Kecobo executive director, said while tariff collections remains low, the industry is complaint in retaining five percent tax on royalties. “All the CMOs are required to comply with that whereby five percent of the money goes to KRA,” Mr Sigei said.
“The (withholding tax) compliance on royalties is high. Probably there is non-compliance in other areas, maybe PAYE (Pay As You Earn) or VAT (Value Added Tax), where people deduct money and do not remit, but not withholding tax. ”
The cash is collected by CMOs as tariffs largely from public entertainment joints such as restaurants based on the size of the premises, seating capacity and number of equipment that play music.
Kecobo said in August the three CMOs have distributed a total of Sh80 million to their members which represented 68 percent of the Sh118 million they jointly collected which is short of the 70 percent requirement in their licences.