December 3, 2022

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Benefits Of Registering As A Taxpayer If You’re A Small Business Operator In KenyaKuza Blog

In his Eighth State of the Nation Address on 30th Nov this year, President Uhuru Kenyatta submitted a report to the parliament recognizing Micro, Small, and Medium Enterprises (MSMEs) as the lifeblood of Kenya’s economy yet a huge number of them are unlicensed.

According to the 2017 Economic Survey, there are about 1.56 million licensed MSMEs and 5.85 million unlicensed similar businesses in Kenya.

This means that less than 27 percent of all businesses in Kenya are registered. Out of these, 92.2 percent are micro-enterprises while only 7.1 percent and 0.7 percent are small and medium enterprises respectively.

The reason some of the MSME operators give for not registering their businesses is that they fear being subjected to high taxation that may end up eating on their profit.

However, as you will soon discover, there are many benefits that await unregistered MSME operators as taxpayers that including loans and government services. 

Bid for government contracts

Bid for government contracts

As a registered small business operator as a taxpayer, you will be putting yourself in the best position to bid and win government tenders and trade with the government and non-government institutions.

If your business is not registered, you cannot bid for government contracts or even partner with other businesses to take advantage of communal benefits including crucial networks, especially with larger companies with who they could even enter into sub-contracts.

Therefore, you will continuously be locked out of useful business associations. Simply put, if an enterprise is not a taxpayer it cannot grow!

Personalized tax and customs advisory services

Personalized tax and customs advisory services

These are services offered by the Kenya Revenue Authority (KRA) through its vast network, social media, and telephony among others to hell MSMEs operators understand the tax and customs environment especially if they intend to get into import and export business.

This is in addition to market and networking opportunities through its taxpayers’ roundtables that the taxman organizes to bring together businesses for purposes of sharing issues affecting them and receiving business advice in line with the core business of the authority.

It is during these meetings that the Authority avails opportunities for entrepreneurs to network and even establish new markets.

Import and export incentives

Import and export incentives

As a small business operator, your goal is to grow from serving the local people to doing business globally. No business operator would their venture remain stagnant hence the need for registration.

MSMEs registered with the taxman stand the chance of receiving import incentives that include reduced import tariffs on inputs such as machinery and raw materials to spur manufacturing of goods for export where the authority offers free VAT for its members.

The taxman also has a provision for capital allowances on installed machinery and a possible 20 percent export compensation arrangement.

Numerous business opportunities

Numerous business opportunities

Did you know? In line with the government directive on public procurement, 30 percent of all procurement at KRA goes to enterprises run by the youth, women, and people with disabilities which are mainly MSMEs. Another reason why you need to register as a small business operator.

Unregistered enterprises should register as taxpayers in order to open doors to business opportunities that can only be accessed once the business acquires the all-important PIN number.