Economy

Kenya to roll out tax incentives to lure investments

Amrita Nair Ghaswalla Mumbai | Updated on January 22, 2018 Published on December 15, 2015

Will soon have a single window for export, import, says KenInvest MD





Kenya is set to roll out several tax incentives next year, including a 10-year tax holiday from all forms of income tax; 25 per cent corporate tax for 10 years following the initial 10-year period; duty and VAT exemptions on machinery and raw materials; a single window clearance and 100 per cent investment allowance, in a bid to propel investments in the region.

Unveiling a slice of the big picture, Moses Ikiara, Managing Director of Kenya Investment Authority (KenInvest), said: “We will soon have a single window for export and import. This will be a one-stop shop, where investors can apply for work permits, as well as for water and power connection to set up their business. Tremendous time will be reduced with this new policy."

He added that there was a need to address the issues that had hindered the attraction, facilitation and retention of investments in Kenya.

Ikiara said Special Economic Zones (SEZs) have been created to attract foreign direct investments in the key urban centres.

Enterprises at the SEZs are set to enjoy several tax incentives, which include value added tax exemption on all supplies of goods and services to enterprises, reduction in corporate tax to 10 per cent from 30 per cent for 10 years of operation, and 15 per cent for the next 10 years.

“An EPZ investor needs to start paying corporate tax only after he recovers 100 per cent of his investment. These are some of the incentives and attractive schemes that will bring in investors from across the world to Kenya,” he said.

India shining

The Export Processing Zone (EPZ) investors are currently enjoying a 10-year corporate tax holiday, and 25 per cent tax thereafter, a 10-year withholding tax holiday and stamp duty exemption. Investors also get 100 per cent investment deduction on their initial investment.

Speaking specifically about India, he said, "We are eager to provide several incentives for the Indian film-making industry, as well as for the ferrous industry. We would like to see more investments from India in the agri sector too, and we have a one-million acre irrigation project."

Stating that the huge Indian diaspora in Kenya has contributed to Kenya’s progress, the official said Indian firms have invested heavily in telecommunications, petrochemicals and agriculture, and have executed engineering contracts in power and other sectors.

"We have a good yield both from crops and from livestock. We need to do value addition and India is very good at this," he added.

"Even in the case of textile and apparels, India is well-known in both. Investors from India can help us set up ginning units for small scale and also help in leather processing," said Ikiara.

Recently, Kenya’s Ministry of East African Affairs, Commerce and Tourism through KenInvest hosted the second edition of the Kenya International Investment Conference (KIICO) which aimed to showcase Kenya as a top investment destination.

Phyllis Kandie, Cabinet Secretary, Ministry of East African Affairs, Commerce and Tourism told the KIICO gathering: "Investment is a crucial element of our journey to realising our Vision 2030 goals, as we aim to transform Kenya into a newly industrialising, middle-income country."

Kenya's economic blueprint Vision 2030, intends to transform Kenya into a middle-income country by 2030.

A wide range of suitable tax treaties, trade and investment agreements are in the works to ensure this.

Anne Kirima-Muchoki, Chairperson, KenInvest, added: "Our economy is growing rapidly, our fundamental's are strong and inward investment continues to double year-on-year. Kenya is open for business.”

(The writer was in Kenya at the invitation of the Kenyan Government)

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Published on December 15, 2015
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