Kenya has offered tax incentives to woo investors seeking to build factories for the manufacture of human vaccines including for Covid-19.
Investors with investments of at least Sh10 billion will enjoy corporate and income taxes at exclusive rates to be negotiated with the government.
This is in line with changes to the law through the Finance Act, 2022 that President Uhuru Kenyatta signed into law last Friday.
Parliament amended the Income Tax Act, through the Finance Bill, 2022, to provide tax incentives to firms that will undertake local production of vaccines.
“A company which is engaged in business under a special operating framework arrangement with the government, incorporated for purposes of undertaking the manufacturer of human vaccines, whose capital investment is at least Sh10 billion, shall be subject to the rate of tax specified in the special operating framework arrangement with the government,” the Finance Act, 2022 states.
Kenya is seeking to establish a full-fledged bulk antigen production facility with the capacity to produce different types of vaccines.
Parliament also amended the Act to exempt taxation on deemed interest in respect of an interest-free loan advanced to a company undertaking the manufacture of human vaccines.
The exemption of tax also extends to compensating tax accruing to a company undertaking the manufacture of human vaccines.
Dividends paid by a company undertaking to manufacture human vaccines to any non-resident person as well as income of a company seeking to make human vaccines will not be subjected to income tax.
Kenya had in January invited firms through a global tender to bid for the construction of a Covid-19 vaccine plant the Kenya BioVax Institute, a State-owned commercial and manufacturing firm. The State has since picked American biotechnology firm Moderna to set up a manufacturing facility in Kenya, its first in Africa, to produce messenger RNA (mRNA) vaccines.
President Kenyatta announced that Kenya had partnered with Moderna in the establishment of this mRNA manufacturing facility to help prepare the country and our sister states on the continent through the African Union to respond to future health crises and stave off the next pandemic.
Moderna chief executive Stéphane Bancel announced it expects to invest about $500 million (Sh56.5 billion) in the Kenyan facility and supply as many as 500 million doses of mRNA vaccines to the African continent each year.
It also has plans to start filling doses of its Covid vaccine in Africa as early as 2023, following a deal with the Kenyan government.