The Kenya National Chamber of Commerce and Industry (KNCCI) says the country is staring at job cuts and collapse of small business if penalties prescribed in the Finance Bill 2024 are adopted.
According to the chamber, the Ksh 2 million penalty proposed in the Finance Bill 2024 are punitive to the Micro, Small and Medium Enterprises (MSMEs) who could be forced to wind down operations.
The Finance Bill 2024 proposes a Ksh 2 million penalty for every month a person has not complied with the integration of the system with the business.
“In the KNCCI Quaterly Business Barometer Survey for Q2/2024, more than half of the respondents were businesses that have less than Ksh 1 million in annual revenue, reflecting Kenya’s economy. Placing a penalty of Ksh 2 million a month on businesses that make less than half of that in a year will lead to closure and job losses,” said Dr Erick Rutto, President KNCCI.
To avoid increase the number of businesses registered on eTIMS, Dr Rutto calls for increased capacity building to ensure business owners are well equipped with information before being onboarded in the system.
“Additionally, a phased approach to the implementation of eTIMS would allow businesses time to adapt and ensure compliance without the immediate threat of severe penalties. A grace period or a tiered penalty system could be considered, where initial non-compliance results in warnings or smaller fines, escalating only if non-compliance persist,” he added.
All business operating in the country were required to register on the eTIMS by the Kenya Revenue Authority by March 31, 2024.
