INCENTIVE

State to waive permits, presumptive tax for businesses

The initiative has started with Nairobi County

In Summary

•The private sector has been pushing for the merger of several business permits and licenses by the national and county governments, which they say remains a burden.

•President Uhuru Kenyatta says his government has heeded the cries of Kenyans to reduce the unnecessary regulatory burden occasioned by the multiplicity of licenses.

Traders and customers at City Market, Nairobi/
Traders and customers at City Market, Nairobi/
Image: MAUREEN KINYANJUI

The government is considering a country-wide waiver of single business permits for all new businesses as it seeks to ease the cost of doing business in Kenya.

It also plans to waive presumptive tax requirement for all new businesses, which has already been done in Nairobi, President Uhuru Kenyatta has said.

In his 'State of the Nation' address on Thursday, the President said the initial focus was in Nairobi County where there was a waiver of Single Business Permits for all new businesses registered in Nairobi for the first two years of their operations, effective March this year.

Presumptive tax requirement for all new businesses was also waived.

“These two initiatives and others within our Ease of Doing Programme will now be aggressively rolled-out nationwide, as we endeavor to make it even easier for both local and international investors to set-up, operate and expand their businesses,” Uhuru said.

He said the government's endeavor is to make Kenya the best country on the continent in Doing Business by the year 2022.

The private sector has been pushing for the merger of several business permits and licenses by the national and county governments, which they say remains a burden to traders.

For instance, you need between 18 to 25 licenses to open a supermarket in Kenya, a survey in the retail sector shows.

Required documentation includes  the mandatory single business permit and fire inspection certificate, while others are based on business operations and include fish trade license, Kenya Bureau of Standards certificate, dairy board inspection, NEMA certificate, Pest Control Product Board, Liquor license and seed selling certificate.

Retailers also require the Music Copyright Society of Kenya (MCSK), Kenya Association of Music Producers (KAMP) and Performers Rights Society of Kenya (PRISK) approvals.

 
 

Further, they must have the Pharmacy and Poisons Board approval, signage permit, Energy Regulatory Commission (ERC) license for sale of LPG, Loading Zone and Sign Board approvals as well as Cook License.

Large retailers are paying Sh50,000 and above for the different licences while  small retailers' licences average Sh20,000, with full compliance pushing costs to hundreds of thousands, raising questions over the country's commitment to ease the cost of doing business.

"Amounts can run into millions of shillings depending on what your business entails. Sometimes it is based on gross sales or square footage," Retail Trade Association of Kenya (RETRAK) chief executive Wambui Mbarire 
at a recent event in Nairobi.

On Thursday, President Uhuru said: “My government has heeded the cries of Kenyans for bold and decisive actions to reduce the unnecessary regulatory burden occasioned by the multiplicity of licenses at both the national and county levels.”

He said the government is continuously enhancing the ease of doing business and creating an enabling environment for all enterprises to thrive.

The President noted that the Number of companies registered daily has increased by 500 per cent from 30 in 2014 to 200 in 2020, and a daily average of 300 during the Covid-19 period.

On aggregate, 400,000 companies are annually now registered in Kenya.

The government has set aside a further Sh5 billion for the operationalizing the Credit Guarantee Scheme, which was approved by Cabinet, chaired by the President, in September.

The scheme commenced with an initial seed capital of Sh10 billion to be released in two tranches of Sh5 billion in 2020-21 and 2021-22.

Development financial institutions and participating commercial financial institutions are expected to boost the state's contributions to at least Sh100 billion.

The Cabinet also approved the Kenya Micro and Small Enterprises Policy, which aims to provide an integrated business environment for the growth and development of stable and vibrant MSEs.