The Finance Act 2017, has been gazetted on 23rd June 2017. The Finance Act seeks to amend the law relating to various taxes and duties.
Corporate tax related reforms:
- New motor vehicle assemblers in Kenya will now enjoy a decreased corporate tax rate of 15% less than the standard rate of 30% for the first 5 years of operation. This provision will be effective 1st January 2018.
- In relation to Special Economic Zones (SEZs), the Act provides for an Investment Deduction Allowance for capital expenditure on buildings and on machinery for use in the SEZs at a rate of 150% outside Nairobi and Mombasa counties where the capital expenditure is incurred on construction of building/purchase and installation of machinery by or for SEZs, effective 1 January 2018.
- The Special Economic Zone (SEZ) Act promote the uptake of investment in this sector particularly by non-resident persons, the CS has proposed additional tax incentives. Specifically, dividends payable to non-residents by SEZ enterprises will be exempt from withholding tax currently chargeable at 10%. Further, withholding tax on interest payable to non-residents by SEZ enterprises will be reduced from 15% to 5%. Professional fees, management, training and royalties’ fees payable by a SEZ enterprise are subject to tax at the rate of 5%.
- The Finance Act 2017 has also increased the tax rate for betting, gaming and lotteries operators to 35% of the total gross revenue.
