Ruto To Save Kenyan Startups From Paying Tax

President William Ruto has announced that start-up companies based in Kenya will be exempted from paying taxes on unrealised gains from July 1, 2023.

Speaking at the Ole Sereni Hotel in Nairobi on Thursday, March 30 during the American chamber of commerce regional business summit, the Head of State confirmed receiving complaints of the government imposing employee benefits tax on allocated shares to Kenyans working in start-ups.

President Ruto noted that his administration wants to make Kenya an apex innovation centre by attracting investments from start-ups, saving them from the hindrances that prevent them from growing to their full potential.

"I have received complaints that we impose employee benefit tax on allocated shares to employees of start-up companies, even before any value is realised on these shares," said President Ruto.

President Ruto visits a Koko Networks stand during the American Chamber of Commerce Regional Business Summit on March 30, 2023. /WILLIAM RUTO

"The government will exempt start-up companies from paying taxes on such unrealised gains on employee-allocated shares starting July 1 this year."

He affirmed the Kenya Kwanza government's commitment to promoting the best operating environment for business enterprises by introducing policies designed to make Kenya the most competitive investment destination across the continent.

"I am committed to making Kenya one of the most attractive places to do business. As you may know, Kenya has been ranked the third most attractive place to do business in Africa by the World Bank, under its ease of doing business scheme," said President Ruto.

"We are also reviewing our Special Economic Zones and Export Processing Zones laws to remove impediments to attracting new local and foreign investments. The raft of amendments are under stakeholder consultations and will be in place by 1st July this year."

President Ruto similarly noted that Kenya has one of the most developed financial services sectors in the continent and that the country is ripe for the establishment of an International Financial Centre in Nairobi to attract global financial players.

"To continue to reinforce this strong position, we are working with organisations such as the Financial Actions Task Force (FATF) to ensure Kenya fully complies with the relevant international standards on money laundering and terrorist financing activities, so as to make this International Financial Centre a reality," he said.

The Head of State correspondingly announced that Kenya, the United States government and the American Chamber of Commerce had launched a trilateral business dialogue, to address and resolve the challenges of U.S. investors and businesses in Kenya, in a bid to boost trade among the two nations.

"This new trilateral platform, scheduled to meet every three months, will serve as a key convening body to jointly tackle investment challenges and is a demonstration of the government’s commitment to hearing directly from the U.S. business community," he said.

Ruto's passion for boosting Kenyan startups is not a new one. Speaking during the launch of the Ksh50 billion Hustler Fund at Green Park Terminus in Nairobi on November 30, 2022, the Head of State announced that the Cabinet would approve a Start-Up Bill on December 6, 2022.

While explaining the four different products that are featured in the Hustler Fund loan kitty, he promised that the bill would provide a means to attract startup opportunities and save those in trouble, especially those operating on online platforms.

Difficult market conditions as well as funding hitches have been responsible for the demise of prominent startups such as Kune Foods, Notify Logistics, WeFarm, BRCK, Sendy, NopeaRide and Sky-Garden in 2022 alone, damaging Kenya's chances of becoming the Silicon Savanah of Africa.

Kenyans working on their laptops. /FILE