Politics and policy

Special Economic Zones Bill set for debate in Parliament

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By EDWIN MUTAI

Posted  Tuesday, January 1   2013 at  18:52

In Summary

  • The government will have the power to declare by notice in the Kenya Gazette any area, business or plant a special economic zone, removing a restriction that required enterprises enjoying preferential treatment to be within a gazetted region.
  • This will see goods and services provided by the area enjoy fiscal benefits in terms of import duties and taxes by being placed outside the customs territory.

Special Economic Zones (SEZ) will soon be established across the country if Parliament passes a new Bill seeking to repeal the Export Processing Act Cap 517 laws of Kenya.

The government will have the power to declare by notice in the Kenya Gazette any area, business or plant a special economic zone, removing a restriction that required enterprises enjoying preferential treatment to be within a gazetted region.

The declaration will, however, be subject to the approval by the Special Economic Zones Authority which will have the power to recommend any area as special economic zone.

Trade minister Moses Wetangula will Wednesday introduce the Special Economic Zones Bill 2012 for debate and ratification by the House.

“A special economic zone shall be a designated geographical area where liberal economic policies, and integrated land use and infrastructure shall be provided,” the Bill states.

This will see goods and services provided by the area enjoy fiscal benefits in terms of import duties and taxes by being placed outside the customs territory.
The Bill provides incentives for enterprises, developers and operators of the special economic zones to make them globally competitive.

All licensed enterprises, developers and operators will benefit from tax exemptions from all existing and future taxes and duties payable under the Customs and Excise Act, the East African Customs Management Act and Value Added Tax on all special economic zones transactions.

The entities will enjoy exemptions from registration under the value added tax Act, payment of income tax for the first 10 years, withholding tax on dividends and any other payments made to non-residents, stamp duty, PAYE and exemptions from quotas or restrictions or prohibition on import or export trade among others.

The Bill also sets out instances where goods processed or imported into a SEZ are deemed to have been exported or imported into Kenya.

“Unless otherwise provided under this Act or any other written law, goods which are taken out from any part of the customs territory and brought into the special economic zone or services provided from part of the custom territory to a special economic zone shall be deemed to have been exported from Kenya,” states clause 7 (a) of the Bill.
Under the proposed law, the SEZ Authority has the mandate to recommend to the government on all aspects of establishment, operation and regulation of special zones. The authority will identify, map and where necessary procure or avail to developers and operators the areas of land designated as economic zones.

The establishment of EPZs which will be transformed into SEZs was aimed at attracting global investment, increased job creation, expansion of exports and increasing productivity and technology transfer.