In his Eighth Point out of the Country Deal with on 30th Nov this year, President Uhuru Kenyatta submitted a report to the parliament recognizing Micro, Compact, and Medium Enterprises (MSMEs) as the lifeblood of Kenya’s financial state yet a large amount of them are unlicensed.
In accordance to the 2017 Financial Survey, there are about 1.56 million accredited MSMEs and 5.85 million unlicensed very similar enterprises in Kenya.
This indicates that fewer than 27 % of all companies in Kenya are registered. Out of these, 92.2 p.c are micro-enterprises though only 7.1 % and .7 percent are tiny and medium enterprises respectively.
The rationale some of the MSME operators give for not registering their corporations is that they worry staying subjected to significant taxation that may finish up consuming on their gain.
Having said that, as you will quickly discover, there are several advantages that await unregistered MSME operators as taxpayers that like loans and federal government providers.
Bid for govt contracts
As a registered modest organization operator as a taxpayer, you will be placing oneself in the most effective situation to bid and win government tenders and trade with the govt and non-governing administration establishments.
If your company is not registered, you cannot bid for governing administration contracts or even spouse with other businesses to get advantage of communal benefits such as very important networks, in particular with larger sized providers with who they could even enter into sub-contracts.
Therefore, you will consistently be locked out of useful business enterprise associations. Merely put, if an company is not a taxpayer it simply cannot grow!
Individualized tax and customs advisory companies
These are services offered by the Kenya Earnings Authority (KRA) by way of its wide community, social media, and telephony among other people to hell MSMEs operators recognize the tax and customs atmosphere specially if they intend to get into import and export enterprise.
This is in addition to marketplace and networking options by its taxpayers’ roundtables that the taxman organizes to deliver together enterprises for functions of sharing troubles influencing them and obtaining business enterprise assistance in line with the main business of the authority.
It is all through these conferences that the Authority avails opportunities for business owners to community and even create new markets.
Import and export incentives
As a little enterprise operator, your intention is to develop from serving the area men and women to performing company globally. No enterprise operator would their undertaking stay stagnant therefore the have to have for registration.
MSMEs registered with the taxman stand the likelihood of obtaining import incentives that contain decreased import tariffs on inputs these types of as machinery and uncooked components to spur producing of items for export wherever the authority offers free VAT for its customers.
The taxman also has a provision for capital allowances on put in machinery and a possible 20 % export compensation arrangement.
Several small business possibilities
Did you know? In line with the federal government directive on public procurement, 30 % of all procurement at KRA goes to enterprises run by the youth, females, and individuals with disabilities which are mainly MSMEs. One more rationale why you have to have to register as a little organization operator.
Unregistered enterprises ought to register as taxpayers in buy to open up doors to business enterprise possibilities that can only be accessed as soon as the enterprise acquires the all-important PIN variety.