By Mandela Joseph
The Kenya Vision 2030 aims to transform the country into a newly industrializing, middle income country providing a high quality of life to all its citizens in a clean, secure environment and also to move the country’s economy towards modernization and globalization. For this to happen and to fast track the country’s vision 2030, Special Economic Zones were designated.
In 1980, Shenzen a small fishing village in southern China bordering Hong Kong was selected as a Special economic zone to bring economic transformation and attract foreign investments.
SEZs are designated areas in which business and trade laws are different from the rest of the country. The major aims of SEZs are;
To encourage businesses to set up in the Zones, financial policies are introduced. Businesses may be offered tax exemptions, where upon establishing in a zone they are granted a period of lower taxation. The benefits a business gains by being in a SEZ may mean that it can produce and trade goods at a lower price, aimed at being globally competitive.
In December 2015, Kenya gazetted the Special Economic Zones Act, an Act of Parliament passed to provide for:
Some of the tax incentives and exemptions are;
*Withholding tax exemptions and reduced rates up to 5%
*Corporate Income Tax rates:
*Custom duty exemptions
*VAT Zero rating for goods purchased by the sez entity
*Stamp duty, IDF and other exemptions.
Sectors that are likely to be covered by SEZ Act include;
*Business parks *Livestock Zones
*Freeport Zones *Agricultural Zones
*Free trade zones
*Tourist and recreational centers