In his Eighth State of the Country Handle 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 economy but a massive selection of them are unlicensed.
According to the 2017 Financial Study, there are about 1.56 million licensed MSMEs and 5.85 million unlicensed very similar firms in Kenya.
This implies that fewer than 27 per cent of all organizations in Kenya are registered. Out of these, 92.2 percent are micro-enterprises while only 7.1 p.c and .7 % are compact and medium enterprises respectively.
The rationale some of the MSME operators give for not registering their companies is that they dread currently being subjected to higher taxation that may possibly stop up having on their earnings.
On the other hand, as you will soon uncover, there are quite a few advantages that await unregistered MSME operators as taxpayers that like loans and authorities expert services.
Bid for federal government contracts
As a registered smaller enterprise operator as a taxpayer, you will be placing your self in the most effective posture to bid and gain governing administration tenders and trade with the government and non-federal government establishments.
If your business is not registered, you simply cannot bid for governing administration contracts or even lover with other companies to choose benefit of communal rewards including important networks, primarily with larger firms with who they could even enter into sub-contracts.
Consequently, you will continually be locked out of helpful business associations. Only set, if an organization is not a taxpayer it are not able to mature!
Personalized tax and customs advisory services
These are companies offered by the Kenya Earnings Authority (KRA) by its large network, social media, and telephony amongst others to hell MSMEs operators have an understanding of the tax and customs atmosphere primarily if they intend to get into import and export company.
This is in addition to marketplace and networking options as a result of its taxpayers’ roundtables that the taxman organizes to provide together corporations for functions of sharing concerns affecting them and receiving small business tips in line with the core organization of the authority.
It is in the course of these conferences that the Authority avails alternatives for business people to community and even establish new markets.
Import and export incentives
As a little business operator, your goal is to grow from serving the nearby people to carrying out enterprise globally. No business operator would their undertaking keep on being stagnant consequently the require for registration.
MSMEs registered with the taxman stand the opportunity of obtaining import incentives that incorporate decreased import tariffs on inputs these types of as equipment and uncooked supplies to spur producing of merchandise for export in which the authority offers cost-free VAT for its members.
The taxman also has a provision for money allowances on set up equipment and a possible 20 per cent export payment arrangement.
Several business enterprise chances
Did you know? In line with the governing administration directive on public procurement, 30 per cent of all procurement at KRA goes to enterprises run by the youth, ladies, and individuals with disabilities which are generally MSMEs. Another explanation why you have to have to register as a small enterprise operator.
Unregistered enterprises should really sign-up as taxpayers in order to open doors to business enterprise opportunities that can only be accessed when the organization acquires the all-crucial PIN quantity.