Raft of incentives target investors in Konza venture
Konza Technopolis Development Authority acting CEO Catherine Adeya at the park on May. Photo/DIANA NGILA
What you need to know:
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.
