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

[Phares Kariuki]

On Thu, Feb 11, 2016 at 12:05 AM, Michael Pedersen via kictanet <
kictanet at lists.kictanet.or.ke> wrote:

> 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.
>       - 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.
>       - 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.
>       - 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".
>       - 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.
>       - 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 ?
>       - 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.
>
>
Micheal is right. Make it simpler for everyone to do business, stop looking
for exceptions in the tax code.

Tax incentives won't work - you'll get caught up in a political spiral. We
are in an echo chamber as tech, so we only see our insular view. Farmers
feed the country, think that what they are doing is important, hence they
need tax breaks. Teachers educate the nation, schools as well, they should
also get tax breaks. At the end of the day, a simple tax policy is more
important than low taxation.



-- 
Warm Regards,

Phares Kariuki

*E*: pkariuki at gmail.com | *Twitter*: kaboro |
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