Are you aware of the most beneficial of these incentives given to investors in Kenya? Well, have no worries. Below are the most favorable of these provided by the government. Do pause a bit and be duly notified of our social media platform. This is a great place to make the best connections and acquire invaluable snippets of knowledge on the continent.
Farm work deductions
If you intend to get into agriculture, the Kenyan government has got you covered with a good range of incentives. This is the most popular. It caters to the expenditure on construction of a building(or buildings) by the tenant or owner of the agricultural land.
If the building is a farmhouse, one-third of the expenditure on one house is granted. This also covers the houses of employees. For other immovable buildings that would be used for the operation of the farm, the deduction takes care of 100% of the whole amount.
Wear and tear deductions
Well this should be the final conviction you need to understand why Kenya has the highest FDI in the region. To show how serious they are about attracting and keeping investors, they have a “wear and tear” incentive.
This incentive covers a wide array of machines, electronics, instruments, and tools that will be used for business purposes. A major highlighted one is the 37.5% deduction on heavy earthmoving, self-propelling equipment e.g. caterpillars, buses, graders, etc.
Industrial deduction
This is also known by its more specific label –“Industrial building deduction”. It covers capital incurred by a person (the owner) on the construction of a building to be used for business purposes by either them or a lessee.
The quantum and type of benefits differ based on the intent of the building. Buildings used for training film crew are entitled to 100% deductions whereas hotels are given a 10% capital deduction which is applicable within the first ten years of operation. These are just two examples. You must check with the Kenya Investment Authority to know what you are due.
Investment deductions
This incentive is put in place to encourage investment in certain prime areas that have been targeted by the government. These areas are Kisumu, Mombasa and Nairobi. It covers cost on building and machinery installed in these places.
100% investment allowance is given to companies that are situated in these above-mentioned places. Also there is a 100% deduction also given to companies that fall under the Export Processing Zone. There is also a shipping allowance provided for the purchase or a new or unused power driven ship of more than 120 tons gross.
Export Processing Zone (EPZ) Incentives
If your brand is designated as an EPZ, you are entitled to a plethora of amazing benefits. The most notable one is the 10% corporate income tax holiday and a 25% tax rate for the next decade. Companies tagged as EPZ commercial enterprises do not enjoy this.
Other popular examples include but are not limited to- perpetual exemption from payment of stamp duty on legal instruments and a two-decade long 100% deduction on new investment in EPZ buildings and machinery.
VAT Incentives
Investors in Kenya enjoy juicy VAT discounts or exemptions. This is most applicable to companies that are accredited as an Export Processing Zone. Such companies enjoy perpetual VAT exemption of inputs.
The term “inputs” is all encompassing and includes but is not limited to raw materials, building materials, office equipment and petroleum fuel for boilers and generators. This also covers heavy-duty inputs like machinery and motor vehicles which do not remain within the “zone”.
Elimination of Bureaucratic Red Tapes
One of the major benefits of investment incentives provided by the Kenyan government is that it helps eliminate bureaucratic bottlenecks. Time is money and investors will give anything to have time on their side.
Kenya has put in place apt measures that enhance the operations of businesses. A key example is the removal of certain hurdles for companies designated as an EPZ. One of such elimination is how the EPZ license is the only one such a company needs for operation. Another is the onsite customs documentation and inspection by customs staff.
The nations of Africa are on a positive march and Kenya is at the forefront of this. These excellent incentives are aiding consolidate great gains being made. The listed benefits for investors should be all the spur you need to get your slice of the upward boom the nation is on.
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FAQ for Excellent Government Incentives in Kenya for Investors
Can I invest in the Dairy Industry in Kenya?
Yes, you can invest in the dairy industry in Kenya. A handful of companies have held a monopoly over the packaged milk business not just in Kenya but in the entire sub-region. Demand though overwhelmingly exceeds supply. With the right marketing strategy and range of products offered, you are certain to make huge profits.
Is the electronics manufacturing industry a profitable one in Kenya?
Kenya has a population that is getting more exposed to technology and its advances with each passing day. With spending power and literacy poised to increase, people will definitely go for what offers efficiency and convenience. If you set up an electronic manufacturing plant that produces economical and high-quality products, you are set up to make great gains.
Why is Kenya the hub of business in East Africa?
Kenya has always been a nation that has attracted people of all races and nations. It is thus a place where everyone feels at home. The nation is also one that has had astute political stability since the time of independence. Its economic reach and its favorable position in the sub-region make it invaluable to the free flow of commerce.