The Treasury has allowed start-ups operating under Nairobi’s financial hub to pay a lower corporate income tax as part of a strategy aimed at attracting investments into the country.
The incentives to startups under the Nairobi International Financial Centre (NIFC) have been granted through the newly signed Finance Act 2025, which also grants lucrative tax holidays to larger corporations.
“In the case of a start-up certified by the Nairobi International Financial Centre Authority, 15 percent for the first three years and 20 percent for the succeeding four years,” the Finance Act 2025 said.
A “start-up” means a private limited company legally recognised under the laws of Kenya, which has been in existence for a period of not more than 10 years with a strong growth potential, incremental innovation or disruptive business model.
The majority of start-ups in Kenya are currently found in sectors such as fintech, healthtech and agriculture.
Besides the startups, the Finance Act 2025 has also granted lengthy tax holidays and dividend tax exemptions for large corporates investing through the NIFC.
The Treasury has allowed companies operating under the Nairobi financial hub to pay a lower corporate income tax of 15 percent for the first 10 years and 20 percent for the next 10 years, on condition that they inject Sh3 billion into the Kenyan economy.
“The Third Schedule to the Income Tax Act is amended…. in respect of a company certified by the Nairobi International Financial Centre Authority, 15 percent for the first 10 years from the year of commencement of its operations and 20 percent for the subsequent 10 years of its operation where—(i) the company invests at least Sh3 billion in Kenya in the first three years of operation” the Finance Act 2025 said.
The tax holiday is, however, on condition that the company is a holding company, at least 70 per cent of its employees in senior management are citizens of Kenya and the regional headquarters of the company is in Kenya.
The Finance Act has also exempted dividends paid by a company certified by NIFC from being subjected to withholding tax if the firm reinvests a total of Sh250 million it earns in that year into the Kenyan economy.
Previously, only companies that own or operate a carbon exchange or emissions trading system within the NIFC would benefit from a reduced corporate income tax rate of 15 percent for the first 10 years of their operations.
The latest amendments are part of the government’s strategy to attract investments into the financial hub, which was started three years ago to attract international financial institutions, investors and multinational corporations.
An international financial centre is a location with venues and facilitating services for international activity in areas such as banking, asset management, insurance and financial markets. It works in a regulatory framework that fulfills international standards.
