Export processing zones (EPZ)
Export processing zones (EPZs) are designated parts of Kenya that are aimed at promoting and facilitating export oriented investments and to develop an enabling environment for such investments. Currently there are over 40 gazetted zones in Nairobi, Voi, Athi River, Kerio Valley, Mombasa and Kilifi in various stages of development by both private and public zone developer/operators. These zones are managed and promoted by the Export Processing zones Authority.
Kenya Export Processing Zones provide an attarctive investment investment opportunity for export-oriented business ventures. There are no restrictions on who can invest in such zones. An EPZ firm may be 100% foreign owned, 100% Kenyan owned or any combination of foreign/Kenyan ownership. The Enterprise is also allowed to bring in foreign workers for training, technical and managerial categories. The scheme also offers a wide range of attractive fiscal, physical and procedures incentives to ensure lower cost operations, faster set up and smoother operations.
Activities eligible for the EPZ incentives include those of :
a) Zone developer/operator (the party that builds a zone, provides premises for investors to occupy and manages those premises)
b)Enterprise (the party that undertakes the export-oriented investment activities) including:
- Commercial activities e.g. bulk breaking, labelling, repacking, trading. (the 10 year taxholiday does not apply to commercial activities)
- Export-related service activities including brokerage and repair, consulting and information but excluding financial services.
Incentives enjoyed by EPZ
Licensed EPZ projects( foreign, local or joint venture) are entitled to the following incentives :
- 10 year corporate income tax holiday and a 25% tax rate for a further 10 years thereafter (except for EPZ commercial enterprises)
- 10 year withholding tax holiday on dividends and other remittances to non-resident parties (except for EPZ commercial licence enterprises)
- Perpetual exemption from VAT and customs import duty on inputs – raw materials, machinery, office equipment, certain petroleum fuel for boilers and generators, building materials, other supplies. VAT exemption also applies on local purchases of goods and services supplied by companies in the Kenyan customs territory or domestic market. Motor vehicles which do not remain within the zone are not eligible for tax exemption.
- Perpetual exemption from payment of stamp duty on legal instruments
- 100% investment deduction on new investment in EPZ buildings and machinery, applicable over 20 years.
Other benefits of investing in EPZS include:
Operation under essentially one licence issued by EPZA. EPZA seeks to minimize bureaucracy and administrative procedures and facilitate licensing, set up and operations of EPZ projects.
- Rapid Project approval and licencing (with exception of projects requiring environmental licence from National Environmental Management Agency NEMA)
- liberalised 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. All zones have a resident Customs office for on-site customs documentation and clearance.
- Unrestricted investment by foreigners
- EPZAS provide One Stop Shop service for facilitation and aftercare
- All zones are built to exacting international standards and provide facilities suited to export production
- Serviced land and ready factory buildings are available for sale or lease to licensed EPZ companies. Water, sewerage, electricity, all weather roads and an illuminated perimeter fence or wall are standard requirement for zones.
- Zone developers provide 24 hour security, street lighting, landscaping and street cleaning services in the zones. Private garbage collection firms are retained do dispose of normal office waste.
- Office premises and storage warehouses are available for lease in most zones.