Mbeere North Member of Parliament George Ruku has called for investigations into tax incentives claimed by Special Economic Zones (SEZ) developers, operators, and enterprises in the country.
While addressing the National Assembly on Tuesday, March 19, Ruku requested a statement from the Chairperson of the Finance and National Planning Committee regarding the tax incentives claimed by SEZs by way of waivers and exemptions.
The legislator further noted that only three of the 35 gazetted zones are public, raising concerns about exploitation.
“The state of affairs could be pointers to a likelihood of compromised integrity of the SEZs. This could particularly be exploited by unscrupulous land dealers purportedly selling the land within SEZs without paying taxes and duties to woo unsuspecting Kenyans and investors into economic exploitation without any economic benefits,” he said.
He questioned the return on investment, saying, “the number of SEZ investors in the country seem to be incommensurate and the SEZ are characterized with low productivity which has made their impact indemonstrable.”
Concerns Over the Number of Public & Private Tax-Free Zones
At the same time, the lawmaker asked the Chairperson to explain the economic feasibility of each of the SEZ gazetted since 2015, including the identities of the promoters and beneficial owners.
Ruku asked for a status report on the amount of land leased out or sold in each SEZs, the identities of the purchasers/lessors and whether the said purchasers or lessors have invested in the respective SEZs.
“The exemptions and waiver which have been extended to each Economic Zone developer, operator, and enterprise in respect of corporation tax, withholding taxes, Value Added Tax (VAT), including VAT on imports and Import Duties for each year, since 2015”, he added.
What are Special Economic Zones
SEZ is a designated and declared area, gazetted for the purpose of undertaking SEZ activities while enjoying special economic regulations that differ from general trade, tax and investment rules.
The zones can either be developed and managed by the government (public) or developed by a private developer (private).
The Special Economic Zones Authority (SEZA) is responsible for attracting, facilitating and retaining domestic and foreign direct investments in SEZs.
SEZA exists to create an enabling environment for investors through the development of integrated infrastructure facilities and creation of incentives that eliminate the barriers to doing business in Kenya.
Registered SEZs
The three gazzeted public SEZs are Dongo Kundu (Mombasa), Naivasha in Nakuru and Konza Technopolis which borders Makueni, Machakos and Kajiado.
Private registered SEZs include Tatu City (Kiambu), Compact FT (Nairobi), Africa Economic Zone (Uasin Gishu) and SBM (Kwale).
Others are Northlands (Kiambu), Mt. Kipipiri Golf & Resort SEZ (Nyandarua), East Africa Free Zone, Mombasa Industrial Park and Two Rivers International Finance and Innovation Centre SEZ in Nairobi County.
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RUTO Commissions Nakuru SEZ
In January, President William Ruto commissioned 90 MVA Naivasha SEZ in Nakuru County.
During the event, the president issued licences to six companies to operate in the SEZ.
Ruto said the companies will invest a total of KSh30 billion in building facilities at the SEZs.
The companies included Accurate Steel Mill Ltd, Tad Moto SEZ Ltd, JAFRO SEZ Ltd, Africa Global Logistics Ltd, Jumbo AA Holdings Ltd and Ceylon Energy Africa Ltd.
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The president further said the investments will create at least 3,000 jobs, attract investments and help build the economy.
“We are on course in our quest to transforming Kenya into an attractive investment destination and a leader in green industrialization,” Ruto said.
“I am very happy that one of the companies investing here will be producing steel that will be used to support our industrialization agenda and our house programmes, among other economic activities,” he added.
Back in October 2023, Ruto said the government will add five more SEZs across the country to attract foreign investments in Kenya.
He said the first phase will be in Sagana, Thika, Nakuru, Eldoret and Busia.
