State orders tax on small businesses reduced

President Uhuru Kenyatta has directed the Kenya Revenue Authority and National Treasury to immediately overhaul Kenya’s tax regime with a view to reducing the burden on Micro, Small and Medium Enterprises (MSMEs). 

The president said Kenya’s economic growth figures have been impressive but the tax burden on SMEs has to be reduced so that more Kenyans can reap the benefits.

The president issued the directive when he led Kenyans in marking this year’s Jamhuri Day at Nyayo National Stadium, a ceremony that was attended by the Prime Minister of Barbados, Mia Amor Mottley.

He said the government was focused on unlocking bottlenecks holding back the potential of Kenyan enterprises.

“My administration is focused on other salient factors that are holding back the potential of our enterprises, particularly with regard to taxes and tax administration, reduction or where possible elimination of fees or charges levied by government agencies as well as the private sector,” the president said.

The Head of State said the government was determined to ensure the elimination of bureaucracy and simplification of processes in trade, access to credit as well as streamline consumer protection.

“In order to address some of these challenges, I order and direct that The National Treasury and the Kenya Revenue Authority review our tax structures, especially in relation to small businesses, so as to reduce the tax burden while fostering tax-compliance,” the president directed.

Tax compliance

He further directed that as a way of reducing the compliance burden on employers, all employer contributions/deductions of the National Social Security Fund, National Hospital Insurance Fund, Pay As You Earn and National Industrial Training Authority be made through a unified payroll return submitted to the Kenya Revenue Authority.

Following the successful launch of SME financing programmes STAWI, the president said the government would soon introduce other products such as Stawisha SME Mashinani and take other administrative measures geared towards enabling SMEs to play their rightful role in national economic transformation agenda.

He also directed that the National Treasury and the Judiciary come up with mechanisms to ensure that commercial disputes below the value of Sh1 million are exempted from court fees.

The Head of State said the government would continue making Kenya more attractive for direct foreign investments and would sustain the regulatory reforms that have seen the country improve in the World Bank's ease of doing business ranking.

He said sustained reforms would continue cementing Nairobi’s place as a diplomatic hub and Kenya’s position as an economic powerhouse in the region.