IPA looking at reducing businesses’ penalty fee

Business

THERE are ongoing discussions to lower the current K1,000 Investment Promotion Authority (IPA) penalty fee imposed on businesses that do not provide annual returns, says managing director Clarence Hoot.
Hoot said they were having discussions with the registrar of companies and looking at different options on how they could make the fee fair for businesses especially SMEs (small-medium enterprises).
“Discussions are ongoing and we are considering a number of options and I think the fees can be reduced,” he said.
“If you are 10 years or more, then we can penalise you for five years and just waive the next five years.
“If the fee changes where introduced in 2016, then you can just pay the fees for 2016 to 2018.
“Those considerations are being looked at but I cannot say when because the decision will come from the registrar of companies.”
Hoot said the current fee were previously determined by operational costs: “I rent two sheds at a cost of K1.2 million a year looking after company files.
“So when we came up with the penalty fees, we decided to come down hard on the registered entities.
“The genuine ones will come and pay and then we can destroy their old files.
“The ones who are not genuine can be identified on the system that they are not updating their records.
“So we thought that we would undergo that exercise and we are finding that a lot of companies are not compliant. “We also previously advertised in the newspapers were we list all the defaulting companies.
“Out of that we were used to getting maybe less than 10 to 15 per cent compliance.
“So if you compare that against the cost of putting up those notices, and when staff compile those lists, it just wasn’t worth it.
“So we decide to apply the K1,000 penalty fee irrespective of how big or small the companies are, everything is standard.
“But we are revisiting that rule.”

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