Corporate News
By OKUTTAH MARK
In Summary
- The Konza Technopolis Development Authority Bill 2014 proposes that businesses which set up shop in the city be exempted from paying 30 per cent income tax for the first 10 years and 16 per cent VAT.
- If the Bill becomes law, it will give the Konza Technopolis Development Authority legal status to enter into contracts.
Investors at Konza technopolis are set to benefit
from a raft of incentives including exemption from paying taxes for 10
years if a Bill is passed into law.
The Konza Technopolis Development Authority Bill 2014
proposes that businesses which set up shop in the city be exempted from
paying 30 per cent income tax for the first 10 years and 16 per cent
VAT, which will also apply to the goods they buy for their operations.
The businesses will also pay a lower tax rate of 15
per cent after the 10 years and dividends paid to shareholders will
also be exempted from withholding tax – which is five and 10 per cent
for locals and foreigners respectively.
Expatriates working at the city will not pay income
tax on their salaries while foreign firms will be exempted from a
rule which demands that they reserve 20 per cent of their shareholding
to local investors.
The local ownership requirement, under the Kenya
Information and Communication Act, has been difficult to implement,
forcing firms such as Airtel, which require heavy shareholder cash
injection, to seek exemption.
“A person licensed to operate in the Konza
Technopolis and engaged in the businesses set out… may be granted any or
all of the exemptions and incentives as set out in the Third Schedule,”
reads part of the Bill.
It adds that the authority in consultation with the
Treasury Cabinet secretary will determine if a company will be allowed
all the exemptions or not. “Such benefits shall be stated in the licence
granted by the Authority,” the Bill notes.
Legal status
If the Bill becomes law, it will give the Konza
Technopolis Development Authority legal status to enter into contracts.
Delay of legal recognition of the authority is partly to blame for the
late takeoff of the project.
Building of roads and an electricity network at the
site will start next month after Parliament allocated the project an
additional Sh400 million, raising the total allocation to Sh900 million.
The first phase will take 400 of the 5,000-acre project.
The tech city is meant to be part of special
economic zones which will replace the export processing zones and create
more than 200,000 jobs.
Konza will be developed under a public private
partnership model where the government will provide land and
infrastructure such as roads, railways, water, telecoms and sewerage
systems.
The Bill also proposes 30 years as the minimum contractual period for leasing land at Konza as opposed to 99 years.
mokuttah@ke.nationmedia.com
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