The National Treasury and Planning has announced that all goods manufactured in Export Processing Zones (EPZs) can now be wholly sold in the Kenyan market. Previously, only twenty per cent (20%) of the total annual production from EPZs could be sold in the Kenyan market. These measures have been put in place in order to shield the EPZs from incurring further losses due to the Covid-19 global pandemic.
The National Treasury has also undertaken to pay the duties and other applicable taxes on goods from EPZs to the Kenya Revenue Authority (KRA), in order to facilitate the clearance of such goods. This is because there are currently no legal provisions exempting goods from EPZs, which are sold in the Kenyan market, from such duties and taxes.
Currently, licensed EPZ companies (except EPZ commercial licenses) are taxed corporate income tax at the rate of twenty-five percent (25%) for a period of ten (10) years, after a ten (10) year corporate income tax holiday. Additionally, such EPZ companies are taxed withholding tax on dividends and other remittances to non-resident parties at the rate of ten percent (10%), after a ten (10) year withholding tax holiday.
The government has ordered that goods from EPZs be released pending the payment of the applicable duties and taxes by the National Treasury.
Further, the government has directed the KRA to put measures in place by 20th May, 2020, to ensure that the tax reprieve only applies to goods from EPZs.
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