The Capital Markets Authority (CMA) is proposing a tax amnesty on SMEs that list in the Growth and Enterprise Market Segment (GEMS).
Many small businesses are apparently afraid that if they get listed and open up their books to the public, the Kenya Revenue Authority (KRA) will hunt them down for previous non-disclosure and slap them with hefty penalties.
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“During our engagements through the SMEs accelerator and incubation programme, we learned that most SMEs fear KRA, so they wanted assurance that when they disclose their statements the taxman will not go for their past incomes,” said CMA Head of Strategy and Policy Jairus Muaka.
Currently, there is a waiver on penalties and interest associated with previous non-disclosures on a case by-case basis.
“The fact that this is considered by KRA on a case-by-case basis, there is still uncertainty since companies fear opening their books without the assurance that they will be able to successfully negotiate,” said the policy proposal.
CMA now wants the Government to provide for tax amnesty for companies that list on the GEMS board, provided that the entity makes full disclosure of its assets and liabilities, undertakes to pay all its future due taxes and remains listed for a period of five years.
The proposed policy also asks for tax incentives to boost listing at the bourse’s main segment that has remained stagnant since Deacons listed in 2016.
Companies seeking to list at the NSE would get a huge tax benefit after proposals were fronted to have them pay only 18 per cent in corporate taxes.
According to the CMA policy proposals to stimulate listing and market depth, companies that open up 40 per cent of their shareholding to the general public will only pay 18 per cent for five years.