Governance

Kenyans Asked to Incorporate their Businesses in Japan in Order to Enjoy Tax Exemption in Kenya

Kenyans wishing to enjoy the tax exemption extended to some Japanese companies operating in Kenya have been asked to register their businesses in Japan.

Speaking to PostaMate, treasury CS Ukur Yatani said that any Kenyan of means is free to register their company in Japan, and even seek funding from the Government of Japan in order to run projects in Kenya.

Kenyan tenderpreneurs had complained that they would face unfair competition from Japanese firms who are exempted from paying taxes, following the exemption granted by the government. While Japanese firms, workers, and consultants pay zero tax, Kenyan entrepreneurs were subject to 30% income tax, 10% kickback, 12% bribes, 18% VAT and another 9% on unknown taxes. This leaves them with only about 50% of the money as the effective budget to do any project.

“We cannot compete on both quality and delivery since for every tender, we have less than 50% of the budget as the actual money available for the project. The Japanese have 100%, and thus can offer better work at a faster rate. This effectively throws us in the mud as we are seen as inefficient while the underlying issue is taxes.”

Unfortunately, incorporating in Japan has other consequences that Kenyan companies are not interested in. They will be under spotlight and may not give as much kickbacks as they want, and they will still have to pay taxes to Japan. It is harder to evade tax in Japan than in Kenya because there are less angry people to bribe.

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