Shock of young Kenyan entrepreneurs in Ksh.7M tax debt

Young Kenyans looking to avoid unemployment are often encouraged to start their own businesses but end up a discouraged lot when the taxman suddenly emerges demanding unpaid dues.

This is the story of one Sam Gichuru, one of the many Kenyan entrepreneurs, who now claims that young people are being told to register companies but are not trained on how handle taxes.

“This is from my personal experience, unfortunately I don’t have time to edit this post and work to pay off KRA…Another big scam in Kenya is asking the youth to register companies without any training on how to handle taxes,” a post on his Facebook page reads.

His post elicited strong reactions from over 250 people, with a majority narrating similar experiences as young Kenyan entrepreneurs.

One of them, Givens Mideva, echoed Gichuru’s sentiments terming it a “big scam.”

Another entrepreneur spoke to Citizen TV‘s Waihiga Mwaura but on condition of anonymity.

She narrated how a visit to KRA offices revealed that she owed the taxman Ksh.7million.

“My journey of entrepreneurship has been quite a challenge. I started a business after finishing high school.From the moment I registered the company I haven’t been successful in acquiring tenders.

“My problem with my PIN started in 2018 when my AGPO certificate expired. I needed to renew it online but on getting to the i-tax portal I discovered that my PIN was blocked,” she said.

She narrated how when she went to KRA offices in February 2018 and was told she owes the taxman Ksh.7million.

“I felt like my world had collapsed and I wished I could move out of this country,” she added.

Gichuru, who shared his own experience on Facebook, is the founder and CEO of two companies: Nailab and Kuhustle.

Three years ago, President Uhuru Kenyatta lauded Nailab for having “incubated over 70 Kenyan entrepreneurs since its inception in 2010”.

According to Gichuru, unsuspecting Kenyan youth register for Value Added Tax with new companies below Ksh.5million but fail to file returns.

This attracts a fine of Ksh.10,000 per month with accrued interest. “By the time you realise your mistake, it is a year down the line and you owe KRA Ksh.120,000 plus interest,” he adds.

This comes even as the said Kenyan entrepreneurs are further urged to apply for the Youth Access to Government Procurement Opportunities (YAGPO).

Gichuru adds that whatever was borrowed as capital now earns interest and the young entrepreneur is in even more debt.

You can watch the full report below: