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Tax incentives in Kenya

Tax incentives in Kenya

Tax incentives are mainly in place to promote investment or exports. Major tax incentives available include:

  • Investment Deduction Allowances (IDA), introduced in 1991 to encourage new investment.
  • Industrial Building Allowance, granted on cost of construction of buildings used for manufacturing purposes and also hotel premises.
  • Capital Expenditure on agricultural land, targeted at farmers who incur capital expenditure in the course of their operations
  • Mining deduction allowance, granted to businessmen involved in mining
  • Import duty set off,allows import duty paid on import of capital equipment to be set off against income tax payable Corporate tax stands at: – Standard rate of 30%.
    -25% for new listing at Nairobi Stock Exchange for 5 years
    Rate of VAT: – Standard 16% – Restaurants 14% – Input for health care, education and exports of goods and services 0%
  • Export Processing Zones allow for duty and VAT free importation of inputs for production of export products within specified zones. Incentives include 10 year tax holiday, exemptions from stamp duty, non liability on income tax for nonresident employees, etc.
  • Tax Remissions Export Office(TREO) primarily involves VAT refunds since duty on most of their inputs is already at 0%
  • Manufacture under bond, also allow for duty and VAT free importation but require that corporation tax be paid