Tax rebate for 10 interns as new jobs plan kicks off

Employers who hire at least 10 fresh graduates as interns will receive a tax rebate equivalent to 50 per cent of the trainees’ salaries after the Treasury gazetted regulations commencing the apprenticeship plan.

The regulations paves the way for the start of the internship plan, first mooted in 2015 to offer graduates on-the-job training for six to 12 months while offering employers an incentive to hire the interns.

This will open the door for thousands of fresh graduates to gain experience and earn cash for upkeep in a country where the unemployment rate stands at 40 per cent.

“An employer shall, subject to regulation 7, deduct a tax rebate equal to 50 per cent of the amount of salaries and wages paid to at least 10 apprentices,” Treasury secretary Henry Rotich said in the regulations.

The programme, which was announced last year, had been delayed due to lack of regulations.

Fresh graduates are generally viewed as unemployable because they lack specialised market skills and experience to perform tasks. Employers in Kenya complain of poor quality graduates who do not meet the needs of the job market, prompting companies to spend millions of shillings on training.

“Firms incur a lot of upfront costs when they hire fresh, inexperienced graduates or interns. Besides paying income tax, firms have to invest in their training,” FKE executive director Jacqueline Mugo said in an earlier interview. Mr Rotich said that employers will have three years to claim the tax rebate.

Employers will be required to seek the written permission of the Director-General of the National Industrial Training Authority (NITA) before they engage the graduates.
The contract between the employer and the intern will then be registered with Nita for it to be recognised.

READ: Employers to get tax rebates for absorbing fresh graduates

Once the internship period ends, the employer will submit a certificate of completion to Nita and a copy to the intern. “The Director-General shall, upon receiving a certificate of completion issue a certificate of apprenticeship to the apprentice,” Mr Rotich said.

They employers could, thereafter, decide to absorb them permanently, put them on contract or release them to the labour market.

The government is banking on the programme to increase the number of people hired by the private sec tor as the country struggles to absorb hundreds of thousands of graduates every year.

The public sector has gone slow on hiring to curb a ballooning wage bill.

Official data shows the economy created 128,000 new formal sector jobs compared to over 500,000 graduates that are pumped into the market annually.

The Public Service Commission (PSC) last year announced plans to declare all internship opportunities in government on a public platform to curb the current practice where agencies independently dish out internship slots, creating room for abuse and favouritism by some officials.