Firms at Tatu City to enjoy lower taxes

Manufacturers setting up shop at the upcoming Tatu City will enjoy lower taxes after Industrialisation secretary Adan Mohamed gazetted the mixed-use real estate project as a special economic zone.

Businesses operating in areas designated as special zones, previously export processing zones, are exempted from value-added tax, income tax, custom and excise duties, stamp duty, and work permit quotas.

Mr Mohamed declared 4,733.7 acres of land belonging to Tatu City in Ruiru, Kiambu County, as a special economic zone via May 22 gazette notice.

Tatu City — a mixed-use development with residential, commercial and industrial amenities — said the new status will help attract more investors to its industrial park which has already signed up more than two dozen production firms.

“SEZ benefits will serve as an added attraction for domestic and foreign investors to invest in industrial, commercial and residential developments, as well as in facilities like schools and hospitals,” Tatu City said in a statement. 

The upgrade to special economic zone comes amid easing of legal fights over control of Tatu City, which is majority owned by American firm Rendeavour.

Rendeavour has been involved in court battles with several individuals including former Central Bank of Kenya governor Nahashon Nyagah and businessman Vimal Shah over control of the company.

Tatu Industrial Park has so far attracted more than $500 million worth of investment from firms setting up plants in the zone including Chinese gas cylinder maker Tianlong Cylinder, Unilever, Chandaria Industries, coffee firm Dormans, and Kim-Fay.

Africa Logistics Properties, which is backed by the International Finance Corporation and CDC Group, last week broke ground to build a grade-A warehousing complex at Tatu Industrial Park with a floor space of 50,000 square metres.

The Special Economic Zones Act (2015) provides for exemption from all existing taxes and duties payable under the Customs and Excise Act, Income Tax Act, East African Community Customs Management Act and Value Added Tax Act on all special economic zone transactions.

Treasury secretary Henry Rotich, in his last Budget speech, gifted foreign firms operating in special economic zones a tax allowance on buildings and machines investment cost. 

The foreign companies in the special zones are also exempted from paying export duty and import declaration fees for both exported and imported goods.