Law on Special Economic Zones entered into force

On 11 September 2015, Kenya adopted Special Economic Zones Act. The Act which entered into force on15 December 2015 aims to promote economic growth through the establishment of designated areas with specific regulatory frameworks, a more flexible and comprehensive approach to attracting investment. Key Features of the of the Act include: • Broader Scope: Unlike EPZs, which had a limited range of activities, Special Economic Zones (SEZs) allow for a wider array of business operations, including manufacturing, services, and technology. Unlike the existing Export Processing Zones, which have a narrow range of permitted activities, the SEZs have a broader scope. Licensed firms will benefit from a range of tax concessions, and a reduced corporate tax rate: instead of the standard 30 per cent rate, SEZ firms will pay 10 per cent for ten years, rising to 15 per cent for the next ten years. SEZ firms, which must be incorporated in Kenya, will also enjoy concessions on work permits for skilled expatriates. Some SEZs will offer specific benefits, such as cut-priced electricity at Naivasha, owing to the proximity of geothermal power sources. Similarly, an agro-processing SEZ may be established near a major irrigation project. Key decisions, including the award of licences, will be taken by a special SEZ authority. • Licensing Framework: The law establishes a clear licensing process managed by the Special Economic Zones Authority (SEZA), which issues three main types of licenses:(i) Developer License: For entities developing infrastructure within SEZs, (ii) Operator License: For those managing the SEZ, and (iii) Enterprise License: For businesses operating within the zone. • Infrastructure Development: The SEZ framework emphasizes integrated infrastructure and utilities to support business operations. This includes provisions for transportation networks and logistical hubs crucial for high-value sectors Kenya's Special Economic Zones Law represents a strategic shift towards creating an investment-friendly environment aimed at stimulating economic development through targeted incentives and improved regulatory frameworks.

• Type:

  • Promotion and facilitation (Special economic zones)

• Industry:

  • Not industry specific

• Sources:

  • Government portal, Kenya Special Economic Zones Act 201: No. 16 of 2015, http://kenyalaw.org/kl/fileadmin/pdfdownloads/Acts/SpecialEconomicZonesNo16of2015.pdf, 15 Sep 2015
  • The Economist Intelligence Unit, Kenya economy: Quick View - Special Economic Zones to launch, http://viewswire.eiu.com/index.asp?layout=VWPrintVW3&article_id=1493805533&printer=printer, 23 Dec 2015