BBI Report proposes seven-year tax holiday for youth in business

Young people starting small businesses will be allowed to operate for seven years without paying taxes, if recommendations to the Building Bridges Initiative are adopted.

According to the document, youth starting micro and medium-sized enterprises will be granted a tax holiday alongside other incentives to expand business opportunities and innovation.

The report recommends “minimising taxation of new and small businesses by giving them a tax holiday of at least seven years as a support to youth entrepreneurship and job creation”.

This will be the first and largest tax incentive offered to entrepreneurs and it comes in the wake of a massive revenue mobilisation drive by the Kenya Revenue Authority (KRA), which has seen new taxes introduced that have had a toll on young business men and women.

Currently, KRA is working on procuring a system that will install a monitoring and payments system for income tax and Value Added Tax from online businesses.

Treasury proposed the introduction of the Digital Tax in the Finance Bill 2019 as one of the means of increasing revenue collection. This is after they missed their target by Sh100 billion.

Members of the public who made submissions to the BBI team raised concern over the taxation burden experienced by small businesses that often deter entrepreneurship.

The BBI taskforce also recommended an advisory desk be set up at every Huduma Centre, manned by a business development expert to help young people start businesses.

The private sector has also been encouraged to form a national, non-profit foundation to provide mentoring and support tools to aspiring business owners between ages 18-35.