Are the incentives accorded to the youth, women and persons with disabilities adequate?


The Government has made various efforts to increase opportunities for youth, women and persons living with disabilities. Its initiatives include financing, priority for public tenders and tax rebates.

One of the objectives of the 2015-16 Budget was to create opportunities for these special groups to enable them apply their talents and capabilities to contribute to the growth of the economy, which is in line with Vision 2030.

To achieve this, it was directed that 30 per cent of all Government tenders be awarded to them. However, for these groups to be able to participate in tenders, they would need finances.

The Government took this into consideration, and introduced various devolved funds to offer financing and training to help entrepreneurs run their businesses effectively and efficiently. The funds include the Youth Enterprise Development Fund, Women Enterprise Development Fund and Uwezo Fund.

Economic sense

On the tax front, an incentive was introduced for employers who engage at least 10 university graduates as interns for six to 12 months during a year of income. The employers would be eligible for a tax rebate the following year.

Guidelines on how employers would claim the rebate are, however, yet to be issued.

The guidelines are critical, as they will help employers gauge if it makes economic sense to have at least 10 interns in their organisations. The Government, in drafting the guidelines, should therefore ensure there is a worthwhile incentive that will encourage the intake of interns.

The idea is well intentioned as it would give fresh graduates opportunities to gain experience, which is necessary for growth in their careers.

However, it can be construed as discriminative as it only applies to university graduates, yet there are youth who graduate from technical training institutes who also need internship opportunities. It would be important for the guidelines to include these interns.

There are also tax exemptions that are applicable to persons with disabilities. However, for an individual with a disability to qualify for the exemption, he or she needs to be registered with the National Council of Persons with Disabilities (NCPD), and make an application to the Kenya Revenue Authority (KRA).

Upon receiving an application, KRA will consult and receive a recommendation from the NCPD on whether the person should qualify for exemption or not. If KRA is of the view that the person qualifies for exemption, it issues an exemption certificate valid for three years.

You may wonder why a validity of three years since it is unlikely that an individual’s status will change. But with the advancements in science and medicine, it may be possible to correct certain disabilities in future — and miracles still happen.

The taxman must have taken these into consideration to ensure the reason for initial exemption remains.

Survival rate

Once individuals are successful in obtaining exemption certificates, Sh150,000 per month of total income is not taxable.

In addition, they are allowed to deduct non-refundable expenses incurred on home or personal care that are as a result of disability. The deduction is capped at Sh50,000 a month.

In my view, this is a good incentive for persons with disabilities who are in business or employment. It would, however, be important to review the exempt and allowable amounts over time to take into consideration inflation.

And possibly, what the youth, women and persons with disabilities would like to see more of in the next fiscal year’s Budget are incentives that would reduce the costs incurred in running a business.

This would enable them price their products competitively, and lead to an increase in the survival rate of start-ups in Kenya and have a positive impact on the economy.

The writer is senior tax manager, Ernst & Young. The views expressed are personal and may not represent the firm’s views.

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