[kictanet] Australian Treasurer proposes 'Netflix Tax' for digital imports

[Michael Pedersen]

Hi Everyone,

Tax-holidays / rebates is in my mind the wrong way to encourage 
more/better startups.

  * A startup generally invests a lot into the company in the initial
    years, and only later once the company has grown does it start
    making a (proper) profit, and since tax's are calculated based on
    profit a initial tax-holiday has very little impact (unless you have
    a smash hit from day one - in which case it matters little anyway).
  * International stakeholders (World-bank ?) strongly encourage fewer
    and fewer exceptions to tax-laws, so to ensure as wide a tax-base as
    possible, afaik this was one of the main motivations for the recent
    revision of the VAT act where most exemptions and zero-ratings was
    removed. So there is strong resistance to introducing new exemptions.
  * Tax-holidays are politically hot-potatoes, every politician will
    argue that the special interest they are representing should have a
    tax-holiday, hence getting an agreement/majority vote to actually
    pass one for any area is highly unlikely.
  * Tax-holidays for new companies could potentially create major
    tax-loopholes, with certain crafty business people re-starting their
    business every x years.


Instead I think that we should look into other ways to incentivize startups

  * Lower the administrative overhead of being in the "formal" sector,
    this will benefit every company but startups/SME's in particular as
    the overhead is a larger burden for these. Also it will be
    beneficial for all companies going forward and not just a few for a
    limited time.
      o Combine payment collections, so that as a company you only have
        to perform ONE payment ONE place every month, then the various
        stakeholders could (easily) split the collected revenue in
        accordance with the supplied returns.
      o Review, simplify and unify the various returns required, When
        doing returns regarding employees some stakeholders ask for
        First, Middle, Last names, others for First and Other names etc.
        In short each individual stakeholder is asking for the "same"
        information but each in their own structure/format, this makes
        it difficult to "copy-paste" information from one return to the
        other and wastes time as you have to maintain the same
        information in multiple formats.
      o Look for ways to reduce the amount of required "registrations",
        why is it that when you hire your first employee you have to
        register with KRA that you have a PAYE obligation, you have to
        register with both NHIF, NSSF, and NITA as an employer, WHY
        can't you just register ONE PLACE saying "We are now employers".
      o Encourage/enable stakeholders to work better together, why is it
        required that you provide the same information over and over
        again to each stakeholder in triplet copies. Example: Allow
        banks to pull registration information from the company registry
        for KYC requirements so that one does not need to bring 100
        copies of everything just to open a bank-account or similar.
  * Lower the learning curve for newly started companies, as a startup
    you have more than enough to learn / deal with, make the compliance
    part as painless as possible.
      o Huduma centers are a great start as a single point of entry, but
        it would be even better to reduce the amount of compliance hoops
        needed to start with. Example my "startup" is in it's 5th year -
        every year without exception we have learned of a new
        stakeholder who we also are supposed to register with and report
        to, meaning that until we learned of it (often by accident) we
        were not compliant with that particular stakeholder. Why can't
        the individual (governmental) stakeholders automatically be
        notified about newly registered companies and reach out ?
      o Ensure that EVERY government agency maintains and UPDATES a "are
        you a new company guide" on their website - which in detail
        explains how to be compliant with that particular agency, and
        most importantly exactly which documents are required for each
        process - did I mention: keep it UPDATED.
  * Offer "startup packages" to newly started companies - offer e.g.
    10hours of professional services from auditors / lawyers free or
    subsidized, this will make it much easier for a newly started
    company to get the advice needed to start in the right direction.
  * Figure out some sort of mentor structure where newly started
    companies are assigned some seasoned administrator to advice them on
    how to structure and deal with all the overhead.


..
Mike


On 2/10/16 8:57 PM, Mwendwa Kivuva via kictanet wrote:
>
> Ahmed, On a practical note, I would wish to see a list of the taxes 
> that hinder the growth of startups. That way, we may point to policy 
> makers the impediments the next Google or Whatsapp in Kenya will face
>
> On Feb 10, 2016 8:27 PM, "Ahmed Mohamed Maawy" 
> <ultimateprogramer at gmail.com <mailto:ultimateprogramer at gmail.com>> wrote:
>
>     I think we all understand how India is significantly ahead of us
>     in matters technology. But still, read on:
>     http://indiatoday.intoday.in/story/pm-modis-big-push-for-startups-3-yr-tax-holiday-rs-10-000-crore-fund/1/572377.html
>
>     I wish we were in any way close to this Mwendwa.
>
>     On Wed, Feb 10, 2016 at 8:04 PM, Mwendwa Kivuva
>     <lordmwesh at gmail.com <mailto:lordmwesh at gmail.com>> wrote:
>
>         Thanks Moses for this.
>
>         Allow us to hijack the thread.
>
>         Ahmed Maawy, what are these taxes you are talking about? Most
>         governments have hundreds of taxes, considering even to bury
>         someone attracts levies. I've heard this line of reasoning for
>         a while. Maybe we can try to debunk it.
>
>         Regards
>
>
>

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