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Start Up Bill 2020 Proposes Tax Relief, Credit Scheme to Promote Innovation

mary wambui, sakaja
Nairobi Senator Johnson Sakaja. [Courtesy]

The Start up bill,2020 has proposed a number of incentives to promote innovation amongst the youth.

In the proposed bill, start ups admitted into the incubation hub will pay less tax. They will be eligible for incentives including fiscal and non-fiscal support as well as protection of intellectual property rights.

The Start up bill 2020 also proposes to establish a credit guarantee scheme as well as support in research and development for the start ups.

The biggest challenge for entrepreneurs seeking to start off their ventures for the first time in Kenya is lack of capital.

Read: Kenya Gazettes Start Up Bill Outlining Registration And Support

“The Bill seeks to provide a legislative framework that promotes an enabling environment for the establishment, development, conduct of business and regulation of startups,” said Nairobi Senator Johnson Sakaja, who has sponsored the Bill.

Incubation hubs comprise companies, non-governmental organizations and partnerships with facilities suitable to accommodate innovative startups such as Nairobi’s iHub and Metta

The bill outlines the process of registration for startups and provides a framework to assist Startups link with the private sector, investors, financial institutions and research organizations.

Read also: Kenyan Innovators, Entrepreneurs To Benefit From Nairobi Garage, METTA Merger

The bill also says that the startups can start incubation as long as they are:

  • registered in Kenya as a company, partnership, limited liability partnership or non-governmental organization – all under the Companies Act, Limited Liability Partnership Act and Non-Governmental Organizations Coordination Act, respectively;
  • is newly registered or has been in existence not more than seven years from the date of its incorporation or registration; and for biotech startups, up to ten years from the date of its incorporation or registration;
  • has its human resources, total assets, and annual turnover number as prescribed by the Cabinet Secretary;
  • has its headquarters in Kenya;
  • is majority-owned by one or more citizens of Kenya;
  • at least fifteen per cent the entity’s expenses can be attributed to research and development activities; and
  • is a holder, depositary or licensee of a registered patent or the owner and author of a registered software.

According to the bill, start ups will be awarded incentives with guidelines for the certification or withdrawal of an incubation programme as well as the responsibilities of the incubator.

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Written by Vanessa Murrey

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