Kenya ought to review its tax incentive model
Tuesday, June 23, 2020 0:01
By MARK NAPIER |
Kenya doesn’t have the resources to pour into huge small business guarantee programmes or furlough schemes.
But we also need private individuals to dig into their own savings and invest in the thousands of solid businesses that may be too small for private equity but could nevertheless start to employ people and contribute to an economic revival in all sorts of other ways.
Incentives could be especially targeted to reward investment in industry sectors that the government wants to build the new economy around – e-commerce or green businesses, for example – or in particular localities, and should specifically exclude some sectors - such as real estate - that do not create jobs or need risk capital.
Because investors would only get tax relief for investing in registered businesses, this would also help to formalise the informal business sector and grow the tax base.
The UK also has Venture Capital Trusts (VCTs), privately managed funds that invest in portfolios of companies – again, retail investors can get upfront income tax relief of up to 30 percent by buying shares in these Venture Capital Trusts up to an annual limit of £200,000(Sh26.6 million).
