{"id":19519,"date":"2020-12-21T19:52:10","date_gmt":"2020-12-21T19:52:10","guid":{"rendered":"https:\/\/www.africa-press.com\/kenya\/?p=19519"},"modified":"2020-12-21T19:52:10","modified_gmt":"2020-12-21T19:52:10","slug":"spare-smes-from-paying-turnover-tax-says-lobby","status":"publish","type":"post","link":"https:\/\/www.africa-press.net\/kenya\/economy\/spare-smes-from-paying-turnover-tax-says-lobby","title":{"rendered":"Spare SMEs from paying turnover tax, says lobby"},"content":{"rendered":"

AfricaPress-Kenya:<\/strong> Manufacturers\u2019 lobby has warned that the move to start taxing small businesses turnover tax will have a huge impact on their business operations.<\/p>\n

The\u00a0Kenya Association of Manufacturers\u00a0(KAM) now wants the minimum tax abolished or suspended, until when effects of the Covid-19 pandemic, which has affected the economy, is managed.<\/p>\n

The manufacturers argue the introduction of the minimum tax will hurt the economy and reduce Kenya\u2019s attractiveness to investors. \u201cIntroduction of a new tax based on turnover will hurt a company\u2019s financial well-being such as creating cash flow constraints,\u201d noted the manufacturers\u2019 body.<\/p>\n

\u201cMinimum tax targets loss-making small companies that already face difficulties in paying taxes, especially with the current Covid-19 impacting businesses negatively.\u201d<\/p>\n

The lobby said the tax comes at the height of a pandemic and was not well thought out and should be shelved. Local businesses will start paying a minimum tax starting next month that will be charged at the rate of one per cent of the gross business turnover.<\/p>\n

The charge was introduced in\u00a0the Finance Act 2020\u00a0to boost the government’s revenue collection. Among businesses expected to be hardest hit by the taxation are low margin businesses, capital intensive businesses with tax incentives, new businesses, and loss-making companies.<\/p>\n

The manufacturers\u2019 body demands that the tax is only applicable after five consecutive years of loss declaration for all companies.<\/p>\n

This plea was echoed by Fredrick Ogutu, a lawyer and senior tax consultant at Deloitte East Africa. \u201cImposing an additional burden in the form of minimum tax on such companies would exacerbate their financial challenges,\u201d he said.<\/p>\n

KAM also wants a reduction of the minimum tax rate to 0.25 per cent, in addition to the State allowing for set-off against the future tax, and a statutory definition of the tax.<\/p>\n

Exemptions should be allowed for firms such as those that deal with exports, it noted. \u201cThe proposed tax will negatively affect business operations and hamper cash-flow, pushing struggling entities to premature closure leading to loss of jobs and taking the economy into a downward spiral,\u201d KAM says.<\/p>\n

\u201cIt is highly unlikely that\u00a0a new business\u00a0would be profitable in the first few years of operation. Adding a tax burden on an unprofitable business will make Kenya\u2019s economic environment\u00a0not conducive for start-ups and businesses whose break-even period is longer.\u201d<\/p>\n

KAM also says businesses could load the minimum tax to customers, increasing the cost of consumer goods and services- making Kenya uncompetitive in the global market. The tax will likely lead to capital flight to favourable tax regimes in the region.<\/p>\n

Kenya\u2019s manufacturing sector grew at 3.2 per cent compared to 4.3 per cent growth in 2018<\/p>\n","protected":false},"excerpt":{"rendered":"

AfricaPress-Kenya: Manufacturers\u2019 lobby has warned that the move to start taxing small businesses turnover tax will have a huge impact on their business operations. The\u00a0Kenya Association of Manufacturers\u00a0(KAM) now wants the minimum tax abolished or suspended, until when effects of the Covid-19 pandemic, which has affected the economy, is managed. The manufacturers argue the introduction […]<\/p>\n","protected":false},"author":84,"featured_media":19522,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2,2111,5,8],"tags":[1539,6979,2845,412,3962,2772],"class_list":["post-19519","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-all-news","category-coronavirus-in-kenya","category-economy","category-homepage-english","tag-covid-19","tag-finance-act-2020","tag-kam","tag-kra","tag-smes","tag-tax"],"yoast_head":"\nSpare SMEs from paying turnover tax, says lobby - kenya<\/title>\n<meta name=\"description\" content=\"Manufacturers\u2019 lobby has warned that the move to start taxing small businesses turnover tax will have a huge impact on their business\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.africa-press.net\/kenya\/economy\/spare-smes-from-paying-turnover-tax-says-lobby\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Spare SMEs from paying turnover tax, says lobby\" \/>\n<meta property=\"og:description\" content=\"Manufacturers\u2019 lobby has warned that the move to start taxing small businesses turnover tax will have a huge impact on their business\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.africa-press.net\/kenya\/economy\/spare-smes-from-paying-turnover-tax-says-lobby\" \/>\n<meta property=\"og:site_name\" content=\"kenya\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/AfricaPressTunisiaa\" \/>\n<meta property=\"article:published_time\" content=\"2020-12-21T19:52:10+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/static.africa-press.net\/kenya\/sites\/28\/2020\/12\/spare_smes_from_payi5fe04b4af2552.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"800\" \/>\n\t<meta property=\"og:image:height\" content=\"533\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"cfeditoren\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"cfeditoren\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"2 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\/\/www.africa-press.net\/kenya\/economy\/spare-smes-from-paying-turnover-tax-says-lobby#article\",\"isPartOf\":{\"@id\":\"https:\/\/www.africa-press.net\/kenya\/economy\/spare-smes-from-paying-turnover-tax-says-lobby\"},\"author\":{\"name\":\"cfeditoren\",\"@id\":\"https:\/\/www.africa-press.net\/kenya\/#\/schema\/person\/068c7ab4e9634ae78ec5d54ec46598bb\"},\"headline\":\"Spare SMEs from paying turnover tax, says lobby\",\"datePublished\":\"2020-12-21T19:52:10+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\/\/www.africa-press.net\/kenya\/economy\/spare-smes-from-paying-turnover-tax-says-lobby\"},\"wordCount\":449,\"commentCount\":0,\"image\":{\"@id\":\"https:\/\/www.africa-press.net\/kenya\/economy\/spare-smes-from-paying-turnover-tax-says-lobby#primaryimage\"},\"thumbnailUrl\":\"https:\/\/static.africa-press.net\/kenya\/sites\/28\/2020\/12\/spare_smes_from_payi5fe04b4af2552.jpg\",\"keywords\":[\"COVID-19\",\"Finance Act 2020\",\"KAM\",\"KRA\",\"SMEs\",\"Tax\"],\"articleSection\":[\"all news\",\"Coronavirus in kenya\",\"economy\",\"homepage-english\"],\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\/\/www.africa-press.net\/kenya\/economy\/spare-smes-from-paying-turnover-tax-says-lobby#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.africa-press.net\/kenya\/economy\/spare-smes-from-paying-turnover-tax-says-lobby\",\"url\":\"https:\/\/www.africa-press.net\/kenya\/economy\/spare-smes-from-paying-turnover-tax-says-lobby\",\"name\":\"Spare SMEs from paying turnover tax, says lobby - 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