Tax Relief

Corporations obtain tax breaks for hiring recent faculty graduates

business

Companies receive tax breaks for hiring fresh college graduates

Friday December 31, 2021

KCA University graduates toss their hats in the air after graduating with various awards during KCA University’s 13th graduation ceremony held at the university on November 26, 2021. PHOTO | JEFF ANGOTE | NMG

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BY JOHN MUTUA
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  • Discharge begins Jan. 1 and is offered to companies that hire graduates for six months to a year, and is designed to encourage skill development and curb Kenya’s high youth unemployment.
  • The Treasury Department made the changes to the Finance Act 2021 to open doors for technical and professional college graduates to gain experience and earn money like their university counterparts.

Companies that employ at least 10 new graduates from technical and vocational universities will enjoy a tax break equal to half of the apprentice’s salary from Saturday.

Discharge begins Jan. 1 and is offered to companies that hire graduates for six months to a year, and is designed to encourage skill development and curb Kenya’s high youth unemployment.

The Treasury Department made the changes to the Finance Act 2021 to open doors for technical and professional college graduates to gain experience and earn money like their university counterparts.

“An employer who employs at least 10 college or university graduates for a period of six to twelve months as apprentices during a year of employment is entitled to a tax refund in the year following the year of employment,” reads the changes.

Kenya has extended the relief to companies employing at least 10 college graduates since 2016. The changes come at a time when the technical and professional facilities are increasingly becoming the focus.

University freshmen struggle for limited job opportunities due to a lack of specialized market knowledge and experience to perform tasks.

Employers in Kenya have been complaining for years about inferior graduates who fail to meet the demands of the job market, causing companies to spend millions of shillings on training.

Graduates from technical and vocational universities are included in the tax relief for employers in the course of increasing enrollments at universities.

Data from the Kenya National Bureau of Statistics (KNBS) shows that enrollment at the institutions rose 130.4 percent last year from 195,857 in 2016 to 451,205 students, underscoring the institutions’ growing popularity.

Kenya has struggled formal jobs for years, a situation that was made worse by the coronavirus pandemic and further worsened employment opportunities for college graduates.

The number of formal posts closed for the first time in two decades underscores the business’s struggles with closings and restrictions caused by the coronavirus.

Data from the 2021 Economic Survey shows that the economy cut 187,300 formal jobs as of June 2020. This is the first time since 2001, when approximately 18,300 employees were struck off the payroll.

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