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Munya said the move will protect SMEs from laws prescribed on the Company’s Act whose taxation regime mainly targets companies/FILE

Finance

End of exploitation of SMEs? Government to create taxation regime for small businesses

The government through the Micro and Small Enterprise Authority is planning to set up a registrar tasked with creating a separate taxation regime for Small and Medium Enterprises in the country.

Munya said the move will protect SMEs from laws prescribed on the Company’s Act whose taxation regime mainly targets companies/FILE

NAIROBI, Kenya, Feb 25 – The government through the Micro and Small Enterprise Authority is planning to set up a registrar tasked with creating a separate taxation regime for Small and Medium Enterprises in the country.

Speaking at the 2020 SME Conference and Expo, Agriculture Cabinet Secretary Peter Munya, who previously served as Trade and Industrialization CS, said the move will protect SMEs from laws prescribed on the Company’s Act whose taxation regime mainly targets companies.

“SMEs will be recognized independently. The company’s Act will therefore be a reserve of companies while SMEs will get their own,” Munya said.

He added that the move will lessen the heavy burden, which includes getting multiple licenses and fees, imposed on small businesses in the country.

“The multiple licenses that SMEs pay is what hurts them. The several things they have to pay for may not be seen, may not reflect in the traditional taxes as those usually cap at a particular turnover,” Munya said,

His sentiments come less than a week after Kenya Revenue Authority started collecting the monthly turnover taxes (TOT) from all Micro and Small Enterprises.

The tax rate for TOT is 3 percent on the gross sales/turnover.

The taxation regime was re-introduced in the Finance Act, 2019, compelling businesses whose income does not exceed Sh5 million.

Kenya National Bureau of Statistics in a 2016 report highlighted the need for reduction of the number of business licenses needed in a single business.

According to the report, businesses are usually required to acquire multiple licenses from different state agencies simultaneously.

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“There is a need to reduce the number of licences required per single business. This can be done by integrating the various licences into one comprehensive document; offering the licence in a central place and ensuring that the process is fast and efficient,” it said.

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