Startups and small businesses in Kenya may get some respite soon. The government of Kenya has launched a number of palliatives to support small businesses and startups in the country. According to President Uhuru Kenyatta, some of the measures adopted to assist small businesses and startups include the fast-tracking payment of outstanding VAT refund and other pending payments to SMEs.
“To combat the effects of this downturn, my administration has had to take additional measures. Today I am happy to announce the rolling out of my 8-point stimulus programme amounting to some Sh53.7 billion. The injection of this money into the economy will stimulate growth and cushion families and companies as together we navigate our way out of the COVID-19 pandemic,” Kenyatta said.
Here Is What You Need To Know
- For purposes of assisting small businesses and startups in Kenya, government has also commissioned Ksh. 10billion to be used to fast track payment of outstanding VAT refunds and other pending payments while Ksh. 3billion as seed capital for SMEs credit guarantee.
- The intention here is to provide affordable credit to small and micro enterprises, the President said.
- Apart from this, President Uhuru Kenyatta also recently signed into law, the country’s Tax Laws (Amendments) that sees a major a corporate tax rate cut and other tax amendments.
- The new law has reduced the rate of tax paid by companies in Kenya from 30 percent to 25 percent per annum. This new change takes effect from the 2020 financial year. This now makes Kenya the country with the lowest tax corporate rate in the whole of East Africa.
- Under the new Tax Laws (Amendments) Act, small and medium enterprises (SMEs) with annual earnings below Ksh.1 million ($9139) have also been exempted from tax, while those from Ksh.1 million ($9139) to Ksh. 50 million ($465,983) now have the turnover tax rate reduced to one percent from the previous three percent.
Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based lawyer who has advised startups across Africa on issues such as startup funding (Venture Capital, Debt financing, private equity, angel investing etc), taxation, strategies, etc. He also has special focus on the protection of business or brands’ intellectual property rights ( such as trademark, patent or design) across Africa and other foreign jurisdictions.
He is well versed on issues of ESG (sustainability), media and entertainment law, corporate finance and governance.
He is also an award-winning writer.