Our Contacts

(+254) 0722801991
(+254) 0780801991
[email protected]

Download our app

Special Economic Zones Act, 2015

Special Economic Zones (SEZs)  are Zones Within A Country That Offer special Tax Rates, Business Laws, And Financing Terms To Attract Investment And Commerce  within The Region. They Are Specifically Demarcated Areas Within The Country Where Raw Materials And Capital Goods Can Be Imported Duty-free From Abroad Or The Domestic Market And A Special Package Of Tax Holiday And Incentives Are Given With View To Boost Exports From The Country.

The Special Economic Zones Act, 2015 Is An Act Of Parliament To Provide For The Establishment, Development And Management Of Special Economic Zones.

  • A Special Economic Zone (SEZ) is a designated geographical area within a Country (in this case Kenya) where the rules of business are different than those in the rest of the Country.
  • Withn the SEZ in Kenya for instance, business enabling policies are implemented and sector appropriate infrastracture are provided for by the Government of Kenya.
  • The SEZ has a business environment which is meant to be more liberal from a policy perspective than from an administrative perspective.
  • The SEZ will have different rules dealing with investment conditions, international trade and customs, taxation and regulation.
  • A SEZ is different from an Export Processing Zone (EPZ), because while EPZ also have preferrential treatment, EPZ only deal with manufacture of goods for export only.


The Proposal by the Special Economic Zones Authority for a Special Economic Zone shall take into account factors including:

  1. Nature of proposed project
  2. Intended size
  3. Availability of land /geographical location/topography
  4. Proximity to infrastructure, population, resources
  5. Provision of medical, recreational, security, administration facilities among others
  6. The impact and approvals on land use and environment
  7. Additional criteria that may be prescribed by regulation.

Unless otherwise proivded under the Special Economic Zones Act or any other written law, goods are exported from Kenya, if they are taken out from any part of the customs territory and brought into the special economic zone or services provided from part of the customs territory to a special economic zone


Goods are imported into Kenya if they are brought out of a special economic zone and taken into any part of the customs territory for use therein or services provided from a special economic zone to any part of the customs territory shall be deemed to be imported into Kenya.

A Special Economic Zone may be designated as a single or a multiple sector economic zone (Section.4 (6)).

Types of Special Economic Zones (First Schedule)

  1. Agricultural Zone: SEZ to facilitate agricultural sector and relates activities and services.
  2. Business Processing Outsourcing (BPO): SEZ to provide outsourcing services such as back office support services in human resources, finance, accounting, and procurement among others.
  3. Business Service Park: SEZ to facilitate provision of services to regional headquarters, BPOs, call centres, management consulting, advisory services and other associated services.
  4. Freeport Zone: A designated area at the port where goods introduced there are regarded to be outside the customs territory (EAC Countries).
  5. Free Trade Zone: A customs controlled area where goods are off-loaded for transshipment, storage and may include bulk breaking, repacking, sorting, mixing, trading or other forms of handling excluding manufacturing and processing.
  6. Industrial Park: A zone with integrated infrastructure to facilitate manufacturing and processing industries.
  7. Information Communication Technology (ICT) Park: A zone to facilitate ICT sector, its services and related activities.
  8. Livestock zone: A zone where livestock marshalling and inspection, livestock feeding or fattening, abattoir and refrigeration, deboning, value addition, manufacture of veterinary products and other related activities are carried out.
  9. Science and Technology Park: A zone to facilitate the science and technology sector.
  10. Tourism and recreation Centre: A zone to facilitate tourism and recreation sector

The Cabinet Secretary for the relevant Ministry (Industry Trade and Cooperatives) issues a notice Under Section 4 of the SEZ Act in the the Kenya Gazette to declare a property to be a Special Economic Zone.

  1. UASIN GISHU COUNTY - LR NO. 6170/58 & 59 (700 Acres)
  2. UASIN GISHU COUNTY - LR NO. ELDORET MUNICIPALITY BLOCK 15/19-132 & 15/151-126 (67 Acres)
  4. KIAMBU COUNTY - LR. NO. 28867 (2,462.7 Acres) (Tatu City)
  5. KIAMBU COUNTY - LR. NO. 7192, 7386, 110/2, 111/1, 113/1, 113/2 (2,271 Acres) (Tatu City)




Section 7(a)) restricts taking out of goods/services in a Special Economic Zone unless they are for:

  1. export ;
  2. entry into customs territory in line with customs regulations;
  3. approved by proper officers conditionally or unconditionally;
  4. meant for repair and maintenance with prior approval of officer

Section 7(c)) Services from Special Economic Zone may be provided to:

  1. individuals outside Kenya,
  2. other Special Economic Zone to promote activities and
  3. persons in customs territory with Authority Approval

Section 8(1)).Goods within a special economic zone, subject to this Act and laws of East Africa Community may be:

  1. Stored,
  2. sold,
  3. exhibited,
  4. replaced,
  5. assembled,
  6. mixed;
  7. destroyed; or
  8. removed under the supervision of an officer from the special economic zone

A penalty for an offence under section 8 on removal of goods from a Special Economic Zone, attracts a fine not exceeding twenty million or imprisonment of not more than 3 years, or both and the goods forfeited(Section 8(3)).

The operation of the Special Economic Zone shall be in line with the provisions of East African Management Act (Section 8 (4)).

Establishment of the Authority (Section 10)

The corporate body established under this Act is known as Special Economic Zone Authority.

Functions of the Authority (Section.11).

These include:


make recommendations to the Cabinet Secretary on all aspects of designation, approval, establishment, operation and regulation of special economic zones;


implement the policies and programmes of the Government with regard to special economic zones;


identify, map and, where necessary, procure or avail to developers and operators the areas of land to be, or which have been, designated as special economic zones;


determine investment criteria including investment threshold;


undertake or approve the development, operation or maintenance, as well as finance, appropriate infrastructure up to the perimeter of, or within, select special economic zones, as and when deemed necessary;


review applications and grant licences to special economic zone developers, operators and enterprises;


promote and market special economic zones to potential special economic zone developers, operators, or other investors;


administer a "one-stop" centre through which special economic zone enterprises can channel all their applications for permits, approvals, licences and facilities not handled directly by the Authority, coordinating with such other Government or private entities as may be necessary through agreements with the entities or procedures defined in implementing regulations or such other prescribed procedures;


exclusively perform under time-bound conditions as may be prescribed, all administrative business regulations and services functions in relation to the designated special economic zones;


maintain current data on the performances of the programme in each individual special economic zone and enterprise;


establish and enhance inter-agency collaboration among relevant State agencies to ensure compliance with all applicable laws, procedures and other applicable requirements;


recommend to the Cabinet Secretary a negative list of activities that are prohibited in the special economic zones including an additional set of, restricted activities under the regulations made thereunder;


recommend to the Cabinet Secretary to suspend or cancel the licences of a special economic zone enterprise or a special economic

zone developer which is in the violation of this Act, the East African Community Customs Management Act or the Value Added Tax Act;


regulate the access of non-licensed service providers from the customs territory as may be required in order to service individual enterprises;


regulate, implement, monitor and supervise all aspects of the special economic zones regime set forth in this Act;


maintain a register of enterprises and residents domiciled in the special economic zones; and


any other functions as may be directed by the Board.


Board of Directors Section12 (1)

The administration of the Authority is vested in the Board of Directors. It consists of:

  1. Chairperson,
  2. Principal Secretary of the Ministry for Industrialization,
  3. Principal Secretary to the Treasury,
  4. Chairperson of the National Land Commission,
  5. Commissioner General for Kenya Revenue Authority,
  6. Four other directors appointed by the Cabinet Secretary and
  7. the CEO who shall be ex-officio

Appointment to the Board is made in line with Chapter Six of the Constitution of Kenya (Section.12 (2)).

Conduct of business and affairs of the Board (Section.13).

The Second Schedule to the Act sets out the conduct and regulation of business by the Board.

Powers of the Board (Section.14 (1)).

The Board is vested with all powers necessary for the performance of the function of the Authority as under the Act.

Remuneration of Directors (Section.15).

Directors are paid by the Authority upon advice of the Cabinet Secretary.

Chief Executive Officer (Section.16 (1-2)).

The appointment of the Chief Executive officer shall be competitive and the holder shall have a minimum of university degree in any prescribed fields, and satisfies the leadership and Integrity requirements under Chapter Six of the Constitution.

The CEO is the secretary to the Board (s.16 (3)).

Staff of the Authority (Section.17)

The Authority may appoint other officers and staff for purposes of discharging the mandate under the Act

Delegation of powers by the Authority (Section 18)

The Board may delegate its powers to any officers, Committees or members for performance of any functions of the Committee

Protection from personal Liability (Section.19).

The staff of the Authority is protected from personal liability on acts done in good faith and on direction by the Authority

Common Seal (Section 20)

The common seal of the Authority is kept in the Board’s custody (Section.20 (1)).

The affixing of the Common seal of the Authority shall be authenticated by the chairperson and the CEO’s signatures (Section.20 (2)).

In absence of the chairperson or CEO, an officer nominated by the Board shall authenticate the seal on their behalf (Section.20 (3)).


Establishment of the Fund (Section.21).

A fund of the Authority is established known as General Fund which is vested in the Authority and administered by the Board.

The Fund shall hold (Section.21);

  1. Monies provided by Parliament meant for expenditure by Authority in exercise of its powers and functions.
  2. Such funds, monies or assets that vest in the Authority
  3. All monies from any other source meant for Authority

Annual Estimates Section 23

The Board shall prepare estimates of revenue and expenditure for that financial year 3months prior to commencement of the year (Section.23 (1)).

The estimates are approved by the Board and then forwarded to the Cabinet Secretary (Section.23 (3)).

Accounts and audits (Section 24)

The Board has the responsibility to ensure that proper books/records are kept

  1. Statement of Income and Expenditure,
  2. a Balance Sheet

The above books shall be sent to the Auditor General 3 months from the end of each financial year.

Investment of funds

The Authority may invest the funds in government securities as may be approved National Treasury.


Any person who carries on a business as a Special Economic Zone developer/enterprise MUST have a license.

Requirements for a license to operate in a Special Economic Zones



Be a company incorporated in Kenya for the purpose of undertaking Special Economic Zone activities

Be a company incorporated in Kenya

Have the financial capacity

Proposes to engage in any activity eligible to be undertaken by a Special enterprise in the SEZ

Have the technical and managerial expertise

Does not have a negative impact on the environment or activities invading on national security or presenting a health hazard

Have a track record of relevant development or operational projects

Conducts business in accordance with the laws of Kenya

Own or lease land or premises within the Special Economic Zone


Register of Licenses (Section 30)

The Special Economic Zone Authority shall keep a register of current holders of Licenses.

An application for licence/renewal shall be made to the Special Economic Zones Authority (Section.27 (1)).

The licence may be suspended/renewed if the holder does not comply with conditions under the Act and Regulations (27(6) (b)).

All approved applications to establish Special Economic Zone are published by the cabinet secretary in the Gazette (27(7)).

A Special Economic Zone developer shall be;

  1. incorporated as a company in Kenya,
  2. have financial capacity,
  3. necessary expertise and
  4. shall own/lease land /premises within the Special Economic Zone

A licence is only granted by the Authority only if the business:

  1. Is incorporated in Kenya
  2. Proposes to undertake activities eligible for special economic zone
  3. Does not impact negatively on the environment/health hazard or threatens national security.

Duty to KRA

The Special Economic Zone Authority has a duty under the Act to inform Kenya Revenue Authority of each special economic zone, developer, operating under the Act (s.31).

Duty to Special Economic Zone facility (Section 32)

  • The Special Economic Zone Authority may call upon the developer to provide and maintain facilities including adequate enclosure to separate Special Economic Zone from customs territory (s.32 (1)).
  • The Authority shall hear out a particular enterprise before issuing an order for cessation of its activities (s.32 (2)).
  • Proper officers in each Special Economic Zone shall offer onsite inspection of imports and exports (s.32 (3))
  • The Authority is responsible for monitoring and enforcement of all rules in the Special Economic Zone (s.32 (4))

A Special Economic Zone Developer has the right to:

  1. Delegate management and administration of its duties under this section of the Act
  2. Lease, sublease or sell land or buildings to licensed Special Economic Zone operators and enterprises
  3. Acquire, dispose or transfer Special Economic Zone lands or other assets
  4. Develop, operate and service land and other assets
  5. Provide utilities and other services both in the zone and outside the zone
  6. Enjoy the benefits under this Act
  7. Contract other parties for purposes of developing infrastructure
  8. Enter and freely participate in international markets
  9. Advertise and promote the zone
  10. The licensed special economic zone enterprises, developers and operators shall be entitled to work permits of up to twenty per cent of their full-time employees; and on the recommendation of the Authority, additional work permits may be obtained for specialised sectors. (Section 35)

Set out in Section 33, (apart from the Regulations):

  1. Undertake physical development /improvements of the site and its facilities
  2. Provide enclosures of its zone area
  3. Provide security on the site
  4. Adopt and enforce rules and regulations
  5. Maintain adequate and proper accounts and other records
  6. Register all leases with the Authority

Penalty (Section 33)

A developer who fails to maintain records/accounts as required commits an offence and is liable to a fine of not more than Three Hundred Thousand Shillings or imprisonment not more than Six Months or both.

Special Economic Zone enterprise shall have the right to:

  1. full protection of its property rights against all risks of nationalization
  2. right to fully repatriate all capital and profits without impediments
  3. to admit into the­­­ Special Economic Zone for which it is licensed, to export and sell in the customs territory
  4. transact and carry on business with a non-special economic zones enterprise
  5. right to contract with any other enterprise including right to determine the prices of any of its goods or service
  6. benefits in the national context of an open, free, competitive investment environment
  7. All other rights and benefits granted to licensed special economic zones enterprises.

Licensed Special Economic Zone enterprises, developers and operators shall be exempted from all taxes and duties payable under;

  1. the Excise Duty Act,
  2. the Income Tax Act,
  3. East Africa Community Customs Management Act and
  4. the Value Added Tax Act on all special economic zones enterprises (s.35 (1)).

Other exemptions are as listed under subsection 2 are;

  1. stamp duty on the execution of any instrument relating to the business activities of special economic zone enterprises, developers and operators;
  2. the provisions of the Foreign Investments and Protection Act relating to certificate for approved enterprise; the provisions of the Statistics Act;
  3. the payment of advertisement fees. and business service permit fees levied by the respective County Governments' finance Acts;
  4. general liquor license and hotel liquor license under the Alcoholic Drinks Control Act, 20 10;
  5. manufacturing license under the Tea Act;
  6. license to trade in unwrought precious metals under the Trading in Unwrought Precious Metals Act;
  7. filming license under the Films and Stages Plays Act; Cap. 222
  8. rent or tenancy controls under the Landlord and Tenant (Shops, Hotels and Catering establishments) Act; and Cap.301
  9. any other exemption as may be granted under this Act in consultation with the Cabinet Secretary for that matter, by notice in the Gazette.

Negotiation and mutual agreements are encouraged for dispute settlement within 30 days.

If a dispute is not settled by negotiation, it may be referred to Arbitration

The Arbitration Act of 1995 shall apply where there is no agreement to applicable law (s.37).

Subscribe to our Newsletter


Subscribe to our mailing list to get updates to your email inbox