In his Eighth State of the Nation Deal with on 30th Nov this calendar year, President Uhuru Kenyatta submitted a report to the parliament recognizing Micro, Compact, and Medium Enterprises (MSMEs) as the lifeblood of Kenya’s economic system nonetheless a substantial number of them are unlicensed.
In accordance to the 2017 Financial Study, there are about 1.56 million licensed MSMEs and 5.85 million unlicensed related enterprises in Kenya.
This indicates that much less than 27 % of all corporations in Kenya are registered. Out of these, 92.2 percent are micro-enterprises even though only 7.1 percent and .7 p.c are compact and medium enterprises respectively.
The reason some of the MSME operators give for not registering their businesses is that they anxiety currently being subjected to large taxation that may well conclude up ingesting on their gain.
Nonetheless, as you will shortly uncover, there are numerous added benefits that await unregistered MSME operators as taxpayers that like loans and federal government companies.
Bid for governing administration contracts
As a registered small business enterprise operator as a taxpayer, you will be placing yourself in the very best situation to bid and acquire government tenders and trade with the governing administration and non-governing administration establishments.
If your organization is not registered, you can’t bid for federal government contracts or even partner with other corporations to get benefit of communal gains like critical networks, specifically with bigger companies with who they could even enter into sub-contracts.
For that reason, you will constantly be locked out of useful business associations. Merely put, if an organization is not a taxpayer it cannot improve!
Personalised tax and customs advisory expert services
These are providers offered by the Kenya Revenue Authority (KRA) via its broad network, social media, and telephony amongst other folks to hell MSMEs operators understand the tax and customs setting particularly if they intend to get into import and export business enterprise.
This is in addition to market place and networking alternatives by way of its taxpayers’ roundtables that the taxman organizes to deliver alongside one another corporations for functions of sharing issues impacting them and receiving company suggestions in line with the core business of the authority.
It is in the course of these meetings that the Authority avails possibilities for business owners to community and even create new marketplaces.
Import and export incentives
As a compact business operator, your goal is to improve from serving the local men and women to accomplishing organization globally. No enterprise operator would their undertaking continue being stagnant as a result the need for registration.
MSMEs registered with the taxman stand the chance of obtaining import incentives that include lessened import tariffs on inputs these kinds of as equipment and uncooked products to spur manufacturing of products for export where the authority gives free VAT for its associates.
The taxman also has a provision for cash allowances on mounted machinery and a possible 20 per cent export payment arrangement.
Various company prospects
Did you know? In line with the authorities directive on community procurement, 30 percent of all procurement at KRA goes to enterprises run by the youth, women of all ages, and folks with disabilities which are mostly MSMEs. Another motive why you need to sign-up as a modest business operator.
Unregistered enterprises must sign-up as taxpayers in buy to open up doors to small business opportunities that can only be accessed when the company acquires the all-important PIN amount.