The prolonged public listing drought has led the Capital Markets Authority (CMA) to propose a tax amnesty to encourage more companies to go public.
Paul Muthaura, the chief executive CMA has said many companies are ready to go public but are afraid of disclosing their past financial statements since KRA could impose a fine on them for taxes not filed.
Speaking at the 7th Building African Financial Markets (BAFM) Seminar for Africa’s 28 stock exchanges, Muthaura said the incentive will encourage more companies to take up the amnesty and commit to sustaining good business practices on corporate governance and fully make tax disbursements as an indication of good corporate governance.
“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 (NSE) chief executive said the fact that no private company has been listed for a significant amount of time has been attributed by the capital gains tax introduced in 2015, the extended election period, and the 2016 global markets’ crisis.
The Africa Securities Exchange Association chairman Oscar Onyema said there are ongoing plans to enable companies to cross-list across Africa with six countries picked to partake in the pilot stage.
The process will involve the creation of an online platform for the stock exchanges in the six countries to enable cross-trading. The platform will allow African investors to spread the risk.
Deputy President William Ruto challenged private companies to go public while urging the CMA and the NSE to think about introducing products that align with the Big Four agenda particularly with the commodities exchange, real estate investment trusts (Reit), and derivative markets.
“The NSE is supposed to help us support more companies, especially the big ones so that they can go to the stock exchange and instead of borrowing money they can list and raise capital for their expansion,” he said.