Youthful entrepreneurs will be exempted from paying taxes for a period of seven years from the moment they register their businesses.
According to the Building Bridges Initiative (BBI) report released yesterday, such a proposal was necessary to safeguard the entrepreneurial spirit of youth in the country.
“The Bill seeks to amend the Micro and Small Enterprises Act, 2012 to give youth-owned enterprises a seven-year tax break, and to establish business incubation centres across the country for the purposes of providing business advisory services, which include access to capital and government contracts," the report reads in part.
"Further, the authority will register and certify enterprises owned by young people, women and people with disabilities.”
The eye-catching tax incentive comes on the back of ambitious plans by the Kenya Revenue Authority (KRA) to expand the country's tax net, initiatives that have seen new taxes introduced.
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Last year, KRA issued a directive targeting small business with a presumptive tax which would be included in their renewable trading licence.
The Micro and Small Enterprises Act of 2012 defines micro-enterprises as those with an annual turnover of less than Sh500,000. Small enterprises are those with a turnover of between Sh500,000 and Sh5 million.
To enjoy the tax incentive, youth will be required to register their ventures with the office of the registrar of micro and small enterprises.
According to data from Kenya National Bureau of Statistics, Kenya’s Micro, Small and Medium Enterprises (MSMEs) contributed approximately 40 per cent of the Gross Domestic Product in 2018 with the majority falling in the informal sector.
While there are about 7.41 million MSMEs in Kenya, only 1.56 million are licensed.