Why tax changes may power down green energy investments

To realise Kenya’s Vision 2030 goals for sustainable and affordable energy, the government has been offering incentives to encourage investment in the sector. One of the most effective incentives in the government’s toolbox is the provision of tax exemptions which have the dual advantage of encouraging investment and possibly lowering electricity tariffs payable by consumers.

Investors in the energy sector enjoy various incentives including a zero rate of import duty and value-added tax (VAT) exemption on renewable energy equipment; exemption from tax on interest paid on loans from foreign sources; exemption from payment of stamp duty in respect of certain instruments; and exemption from withholding tax on payments made to a non-resident for specific services rendered under a power purchase agreement.