The long-standing listing drought has caused the Capital Markets Authority (CMA) to propose a tax amnesty for companies that want to go public.
Paul Muthaura, CMA chief executive said many companies are willing to be listed publicly but are held back by the requirement to make past finances public, allowing the taxman to use the disclosures to exact a fine on them for any unpaid taxes.
Addressing the issue during the 7th African Financial Markets Seminar for Africa’s 28 exchanges, Muthaura said the incentive could encourage more companies to take up the amnesty but commit to sustaining good business practices on corporate governance and making full tax disbursements as a show of good corporate practices.
“What we have put forward in our proposal to the Treasury is [the] introduction of tax waivers especially on taxes not paid in the past so that a lot of companies with that sensitivity can proceed to list, but with a commitment to become compliant going forward,” he said.
Geoffrey Odundo, the Nairobi Securities Exchange chief executive said the long-standing IPO drought is as a result of the capital gains tax introduced in 2015, the 2016 global markets’ crisis, and the extended election period.
Oscar Onyema, the Africa Securities Exchange Association chairman said plans were underway to have companies cross-list across Africa with six nations picked to get involved in the pilot stage.
An online platform will also be created for the exchanges in the six nations enabling cross-trading thereby offering African investors a chance to spread the risk.
The Deputy President Willian Ruto asked the CMA and NSE to consider introducing products that promote Kenya’s Big Four agenda in the coming five years, particularly the commodities exchange, derivatives markets, and the Real Estate Investment Trusts (Reit).
