In his Eighth Condition of the Country Deal with on 30th Nov this yr, President Uhuru Kenyatta submitted a report to the parliament recognizing Micro, Little, and Medium Enterprises (MSMEs) as the lifeblood of Kenya’s overall economy yet a big range of them are unlicensed.
According to the 2017 Financial Survey, there are about 1.56 million accredited MSMEs and 5.85 million unlicensed similar companies in Kenya.
This implies that much less than 27 % of all firms in Kenya are registered. Out of these, 92.2 percent are micro-enterprises though only 7.1 per cent and .7 % are modest and medium enterprises respectively.
The rationale some of the MSME operators give for not registering their firms is that they anxiety getting subjected to high taxation that may well finish up eating on their income.
On the other hand, as you will before long learn, there are lots of rewards that await unregistered MSME operators as taxpayers that which include financial loans and governing administration companies.
Bid for authorities contracts
As a registered little enterprise operator as a taxpayer, you will be placing on your own in the ideal placement to bid and earn governing administration tenders and trade with the government and non-authorities establishments.
If your business is not registered, you are unable to bid for govt contracts or even associate with other businesses to acquire advantage of communal gains which include essential networks, in particular with much larger businesses with who they could even enter into sub-contracts.
As a result, you will repeatedly be locked out of useful small business associations. Merely put, if an company is not a taxpayer it can not mature!
Personalized tax and customs advisory companies
These are products and services provided by the Kenya Revenue Authority (KRA) by way of its extensive community, social media, and telephony amid other individuals to hell MSMEs operators recognize the tax and customs setting primarily if they intend to get into import and export company.
This is in addition to market place and networking opportunities via its taxpayers’ roundtables that the taxman organizes to convey jointly firms for reasons of sharing problems affecting them and getting small business information in line with the main enterprise of the authority.
It is in the course of these meetings that the Authority avails alternatives for business people to community and even set up new marketplaces.
Import and export incentives
As a little business enterprise operator, your target is to improve from serving the community folks to doing small business globally. No enterprise operator would their undertaking keep on being stagnant that’s why the will need for registration.
MSMEs registered with the taxman stand the opportunity of acquiring import incentives that incorporate lowered import tariffs on inputs this sort of as machinery and raw products to spur manufacturing of items for export exactly where the authority gives free VAT for its users.
The taxman also has a provision for capital allowances on mounted equipment and a attainable 20 p.c export compensation arrangement.
Several organization options
Did you know? In line with the govt directive on community procurement, 30 % of all procurement at KRA goes to enterprises run by the youth, gals, and persons with disabilities which are generally MSMEs. Another rationale why you have to have to sign-up as a smaller enterprise operator.
Unregistered enterprises should really sign-up as taxpayers in buy to open up doorways to small business options that can only be accessed the moment the company acquires the all-critical PIN amount.