Special Economic Zones which are governed by the Special Economic Zone Authority are set up as a means of realizing Vision 2030 and the Big 4 Agenda through creating a favourable business environment for investors within delineated special zones through integrated infrastructure facilities, removal of impediments to economic and business activities undertaken by SEZ Enterprises.
REQUIREMENTS FOR SETTING UP IN A SPECIAL ECON
A company can be registered either as a developer, operator, or an enterprise within a special economic zone depending on the nature of intended operations. The applicant must meet the following requirements:
- Must be a company incorporated in Kenya,
- Must have the financial capacity and technical expertise to carry out the SEZ proposed operations;
- Must own or lease land or premise within an SEZ to set up its operations
- Must engage in any activity eligible to be undertaken by an SEZ;
- The company’s operations must create employment opportunities to the local residents.
- The operations of the company should not have negative impact on the environment or engage in activities that are a threat to national security.
BENEFITS OF SETTING UP YOUR COMPANY IN A SPECIAL ECONOMIC ZONE
Both local and foreign owned companies may set up business in a Special Economic Zone in Kenya and are amenable to the following incentives;
- It is a One Stop Shop service for facilitation and aftercare – SEZA Investor Support Division offers support to SEZ enterprises and advice.
- Operation under essentially one license issued by SEZA aimed at minimizing bureaucracy and administrative procedures.
- Exemption provided under the SEZ Act include;
- Exemption from rent and tenancy controls.
- The provisions of the Foreign Investments and Protection Act relating to certificate for approved enterprise.
- Exemption from the payment of advertisement fees and business service permit fees levied by respective County Governments’ Finance Acts among others.
- Fiscal (Tax) Incentives-SEZ
|Corporate tax||10% for the first 10 years after start of operation. 15% for the next 10 years. 30% for the subsequent years.|
|VAT||The supply of goods or taxable services to an SEZ is perpetually VAT exempt|
|Stamp duty||Perpetual exemption from stamp duty on any executing documents or instruments relating to the business activities of SEZ enterprises, developers and operators.|
|Withholding Tax||WHT rate of 5% on the all payments by the SEZ enterprise, developer or operator to non-resident persons.|
|Investment Deduction||Outside Nairobi and Mombasa counties – 150%. In other cases – 100% This is applicable on all construction of a building and purchase/ installation of machinery for use by a SEZ enterprise Excise Duty Excise Duty is perpetually exempt|
|Excise Duty||Excise Duty is perpetually exempt|
|Import Declaration Fees/Railway Development Levy||IDF/RDL Perpetual Exemption from payment of IDF and RD|
- Rapid Project approval and licensing.
- Liberalized foreign exchange regime and easy repatriation of capital and profits, access to foreign currency accounts, domestic and offshore borrowing.
- Onsite customs documentation and inspection by Customs Staff.
- Unrestricted investment by foreigners.
- Entitlement 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 specialized sectors
THE LICENSE APPLICATION PROCESS IS AS FOLLOWS:
- Investment Inquiry: the investor confirms the proposed SEZ activity with the Special Economic Zones Authority in order to be issued with the relevant application forms.
- SEZ Investment Project Application: the investor is required to make the application for the SEZ License for the Authority to provide advice where necessary.
- Formal Application: the investor is issued with the SEZ License application to complete and attach documents as per the list of requirements.
- Appraisal/Review of Application: by the SEZ Authority ensues to confirm that all the information has been provided and meets the set criteria.
- Approval: once the application satisfies the requirements, an approval letter is issued
- Issuance of SEZ License: an SEZ License is issued to the company after payment of the Annual License fee of USD 1000 and fulfilling the following requirements:
- Investment Agreement and land lease agreement from the SEZ Company.
- NEMA License/approval letter
- Fulfilling any other registration conditions given at this stage relating to business activity.
- Obtain the National Environment Management Authority (NEMA) Certificate:
- Obtaining the final SEZ License at an annual fee of USD 1,000.