Introduces several changes to align tax regime to development priorities

21 Jun 2022

On 21 June 2022, Kenya’s President assented into law the Finance Act, 2022. The Act amends various laws including the Income Tax Act (ITA), the Insurance Act, and the Capital Markets Authority Act. Amont others, the Act introduced:

• A new Special Operating Framework arrangement, whereby certain companies will be subject to the rate of tax specified in a special operating arrangement with the Government. This includes companies whose capital investment is at least KES 10 billion, companies manufacturing vaccines for humans, and companies under a special operating arrangement with the Government; and • A reduced corporate income tax rate of 15%, for the first 10 years upon commencement of operations, for a company operating (i) A carbon market exchange or emission trading system that is certified by the Nairobi International Financial Center Authority (ii) A shipping business in Kenya

The Act also increased some taxes or reduced certain incentives. In particular, the capital gains tax increased from 5% to 15% and gains from financial derivatives earned by non-resident persons are now subject to withholding tax at a rate of 15%.